≈ When Buyers Return. ≈

Traders,

The most popular candlestick patterns signal a reversal is taking place. They can be bullish or bearish. Today we’ll focus on the former.

These occur at support zones and confirm that price has switched from going down to up. In simple terms, support is an upward move in price. But how prices fall and then recover varies. Thus, there are many bullish reversal candle patterns with anywhere from one to three candles.

Here’s an example of each.

A hammer candle boasts a small body with no upper wick and a long lower wick. It forms when prices fall significantly early in the day but rally back aggressively before the closing bell. It shows that bears had the upper hand in the morning, but bulls fought back and took control of the intraday trend by the end.

A bullish engulfing candle pattern involves two consecutive candles. The first is a down day showing sellers in complete control. The next day has prices opening lower, hinting at continuing the previous session. But buyers swarm to ram prices higher all day long. Notably, the candle body completely envelopes the previous day, effectively trapping any bears who entered.

A bullish abandoned baby candle pattern consists of three candles. The first is a down day that closes near the low. The second starts with a down gap and ends with a narrow body showing momentum slowing. Finally, the third starts with an up gap and ends with a bullish close confirming buyers have wrested control of the short-term trend.

🛑 Upcoming Webinar – Technical Analysis 101: The Basics of Candlesticks Analysis with Coach Tyler Craig | January 17th, 2022 at 8:30 PM EST on YouTube

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In this webinar, you are going to learn:

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✅ The basics of bearish reversal candles
✅ Understanding candlesticks in the context of the trend

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