If it’s money and wealth for material things, money to travel and build memories, or paying for your child’s education, it’s all good. We know that you’ll walk away from a stronger, more confident, and street-wise trader. What we really care about is helping you, and seeing you succeed as a trader. We want the everyday person to get the kind of training in the stock market we would have wanted when we started out. The signal of this pattern is considered stronger than a signal from a simple evening star pattern. In late March and early April 2000, Ciena (CIEN) declined from above $80 to around $40.

The 15 Best Bullish & Bearish Reversal Candlestick Patterns Explained

The first candle is bearish, while the second is bullish, suggesting that sellers tried to push the price lower but failed. This pattern signals a potential bullish reversal, especially when found at the bottom of a downtrend. This 1-minute chart of AAPL shows strong bullish confirmation when price action reversed near the bottom of a downtrend. Multiple bullish candlesticks were followed by consolidation candles, forming an ascending triangle. After multiple touches of resistance, there was a flat top breakout.

How reliable are trend reversal candlestick patterns?

They also provide well-defined risk parameters for stop-loss placement. Engulfing patterns in particular tend to be reliable across most markets and timeframes, making them excellent starting points for new traders. Now that we've covered the most important candlestick patterns, let's discuss some practical strategies for implementing them in your trading. A candle with virtually identical open and close prices, creating a cross-like appearance. Signals indecision in the market, and when appearing after extended trends, often warns of potential reversals. A price gap where a candle opens significantly lower than the previous candle's low, with no price overlap.

The second opens below the red candle’s low but closes more than halfway into the red candle’s body. In this article, we’ll break down 21 bullish candlestick patterns every trader must know in 2025, explaining how they work and when to use them. Patterns, moving averages, and candlestick charting show trend reversals, price action, support, and resistance. However, if a stock does not go according to plan, there is no need to worry. In the chart below, many signals came together for IBM in early October. After a steep decline since August, the stock formed a bullish engulfing pattern (red oval), confirmed by a strong advance three days later.

Their bullish or bearish nature depends on the preceding trend. Harami are considered potential bullish reversals after bullish reversal candlestick patterns a decline and potential bearish reversals after an advance. No matter what the color of the first candlestick, the smaller the body of the second candlestick is, the more likely the reversal. If the small candlestick is a doji, the chances of a reversal increase.

The 10-day Slow Stochastic Oscillator formed a positive divergence and moved above its trigger line just before the stock advanced. Although not in the green yet, CMF showed constant improvement and moved into positive territory a week later. Candlestick patterns work across all financial markets and timeframes because they reflect universal market psychology – the interaction between buyers and sellers. They tend to be more reliable on higher timeframes (daily and weekly charts) compared to very short timeframes (1-minute or 5-minute charts) where market noise can create false signals.

Identify Key Support and Resistance Levels

This makes the MACD particularly useful in identifying longer-term reversals, as opposed to short-term market noise. The MACD histogram also offers insights into the strength of the current trend, further enhancing the indicator’s ability to spot reversals. The Harami pattern is a 2-bar reversal candlestick patternThe 2nd bar is contained within the 1st one Statistics to... The body of the second candle is utterly contained within the body of the first one and the color of the first is inverse of the second one.

• To trade the hammer candlestick, traders should first identify an instrument that is in an existing downtrend.
• Professional traders rely on TradingView's advanced charting tools to identify high-probability candlestick patterns.
• We have members that come from all walks of life and from all over the world.

Also, we provide you with free options courses that teach you how to implement our trades as well. If you would like to contact the Bullish Bears team then please email us at bbteam@bullishbears.com and we will get back to you within 24 hours. That’s why learning to quickly recognize them can help you adapt to changing market conditions. It’s better when this pattern has gaps, but that is not a necessary condition. The security is trading below its 20-day exponential moving average ().

Bullish Reversal Candlestick Patterns

Remember, you can use candlestick charts to see a stock’s action over any time frame. The one you pick will depend on your trading plan and strategy. Candlestick charts provide a quick snapshot of a stock’s price action.

Because the first candlestick has a large body, it implies that the bullish reversal pattern would be stronger if this body were white. The long white candlestick shows a sudden and sustained resurgence of buying pressure. White/white and white/black bullish harami are likely to occur less often than black/black or black/white. After declining from above $180 to below $120, Broadcom (BRCM) formed a morning doji star and advanced above $160 in three days. These are strong reversal patterns and do not require further bullish confirmation beyond the long white candlestick on the third day.

Bullish Harami Cross

Then a gap up to the body of a third, green candle that closes above mid-point on the body of the first candle. Tall red candle followed by a lower small candle, either green or red, with a gap between the two bodies. Then a gap up leads to a third, tall green candle that closes above mid-point on the body of the first candle. While not as commonly highlighted, these patterns can be useful for spotting potential upward trend reversals when combined with other analysis tools. The Bullish Engulfing is a two-candle pattern that signals a shift from bearish to bullish sentiment.

• The piercing line is a bullish reversal pattern made of two candles.
• Candlestick charts provide a quick snapshot of a stock’s price action.
• Candlestick patterns are visual patterns, aiding traders to visualize when there is a movement in market sentiment.
• The Three Inside Up is a bullish reversal pattern that builds on the Bullish Harami.

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In practicality though, many traders will make various exceptions. Copyright © 2025 FactSet Research Systems Inc.© 2025 TradingView, Inc. "The ability to spot patterns isn't just useful—it's how we make sense of an otherwise overwhelming world." AxiTrader Limited is a member of The Financial Commission, an international organization engaged in the resolution of disputes within the financial services industry in the Forex market. When acquiring our derivative products you have no entitlement, right or obligation to the underlying financial asset. AxiTrader is not a financial adviser and all services are provided on an execution only basis.

A single-candle bullish reversal pattern with a small body at the bottom and a long upper wick, appearing during downtrends. Despite its shooting-star appearance, context makes it bullish as it indicates buying pressure starting to emerge. A single-candle bullish reversal pattern with a small body at the top and a long lower wick at least twice the body's size.