Candlestick charts are arguably one of the most powerful technical analysis tools in a trader’s arsenal. In fact, most stock chart programs use candlesticks as the default mode.
Candlestick patterns are formed by the combination of one or more candles. There are mainly two types of candlestick patterns – bullish candlestick pattern and bearish candlestick pattern. In this article, we will cover 5 important bullish candlestick patterns. They are
- Bullish Engulfing
- Hammer
- Bullish Harami
- Piercing Line
- Morning Star
#1 Bullish Engulfing
Bullish engulfing pattern comprises of two candles. 
The first candle would be a small red candle while the second candle would be a big green candle. The second day’s candle would completely engulf the first day’s candle.
The figure shows the Bullish Engulfing pattern.
A practical application of this pattern can be seen on the chart of the stock below. Once the bullish engulfing pattern was formed after a downtrend, the stock started moving up.
#2 Hammer
Hammer is a single candle pattern indicating a reversal from the bearish trend. 
A hammer has a long lower shadow and it closes at (or nearest to) the high price of the day.
The figure shows the Hammer pattern.
A practical application of this pattern can be seen on the chart of the stock below. Once the hammer pattern was formed after a downtrend, the stock started moving up.
#3 Bullish Harami
Bullish Harami is a bullish reversal pattern that comprises of two candles. 
The first candle would be a red candle while the second candle would be a green candle with a small body. The second candle of Bullish Harami pattern would be completely within the range of the body of the first candle.
Note: If the second candle is a Doji, it is called as Bullish Harami Cross pattern.
The figure shows the Bullish Harami pattern.
A practical application of this pattern can be seen on the chart of the stock below. Once the Bullish Harami pattern was formed after a downtrend, the stock started moving up.
#4 Piercing Line
Piercing Line pattern is made of two candles. 
The first candle would be a long red candle while the second candle would be a green candle. The open price of the second candle of Piercing line pattern would be lower than the close price of the first candle. Meanwhile, the closing price of the second candle would be within the first day’s candle.
The figure shows the Piercing Line pattern.
A practical application of this pattern can be seen on the chart of the stock below. Once the Piercing Line pattern was formed after a downtrend, the stock started moving up.
#5 Morning Star
Morning star pattern consists of three candles. 
The first candle would be a large red one formed during a downtrend. The second one would be a red or green candle with a small body which closes below the first candle. The third candle would be a large green candle.
The figure shows the Morning star pattern.
A practical application of this pattern can be seen on the chart of the stock below. Once the Morning star pattern was formed after a downtrend, the stock started moving up.
Happy Trading!
Tara
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