Hi guys! First of all thanks to everyone for read me and support my blog! You have been an amaizing audience!. Today I want to talk about 5 bullish candlestick patterns to pay attention in this crazy market.
#1 The Hammer
The hammer it's a bullish signal of the market and it is formed by a short body and a long lower shadow (2 or 3 times the body) and it is commonly found at the end of a downtrend. It is showing that even though there were a strong selling pressure during the day, it was overcomed by a strong buying pressure that drove the closing price higher than the opening.
#2 Inverse Hammer
Similarly to the hammer, the inverted hammer is a bullish signal. In this case the upper shadow is long while the lower is short. It is indicating us that during the day were buying pressure followed by a selling pressure that was not enough strong to drove the price down. This signal is telling us that the market is controlled by the bulls
#3 Bullish Engulfing
This pattern it is formed by two candlesticks. The first one is a short red body followed at the nex day by a long green one which completely engulfs the body of the previous one. This pattern often triggers a reversal in a downtrend and is a signal that a bullish trend is starting.
#4 Piercing Line
This is another two candles pattern. It is formed by a long red candle followed by a long green candle. The green one must open below the low of the first one and close obove the middle of the previous one. It is indicating that the initial rush of bearish expectations was overcomed by the bulls beating much of the first candle. This pattern is predicting a change of trend upwards.
#5 Morning Star
This is a triple candlestick pattern that forms after a downtrend. It is formed by a one short body candle (sometimes a doji candle) between a long red and a long green. It reveals a slowing down of downward followed by a large bullish move. The candle in the middle represents indecision in the market and the end of the downtrend.
Finally, you should remember this principle:
Trade the market, not the pattern.
While the patterns can give us valuable information about a trend, you have to pay special attention to the market context and to the different indicators available to make a trade decision.
I hope you've enjoyed the content and start using it in your future trades.
See you next time 👍