Bullish reversal candlestick patterns

• Piercing line

A long bearish candlestick is followed by a gap lower during the next trading period while the market is in a downtrend. The session ends up as a strong bullish stickclosing more than halfway into the previous bearish candlestick’s real body.

Piercing line

The greater the extent of coverage of the bearish real body, the more probable the pattern will result in a reversal.

Wait for confirmation of the trend reversal in the form of another bullish candlestick, a higher close or a large gap up in the following trading session.

• Kicking

The Bullish Kicking Pattern is a bearish marubozu followed by a bullish marubozu. After the day the bearish marubozu formed, the market gaps up above the previous trading session’s open price level.

Kicking pattern

Make sure that both candlesticks are either marubozus (i.e. they do not have any wicks at all) or they have very short wicks.
The bullish kicking pattern is quite reliable, but as always waiting for a confirmation of the reversal is recommended. This confirmation could appear as a bullish candlestick, a higher close on the third day or a large gap higher.

• Abandoned baby

This is a very rare bullish reversal signal. It is comprises a doji star, which gaps down from the previous day. The third candlestick gaps up from the doji star.

Abandoned baby pattern

The reliability of this Japanese candlestick pattern is very high, but as always waiting for a confirmation of the reversal is recommended. This confirmation could appear as a bullish candlestick, a higher close on the third day or a large gap higher.

• Morning doji star

This is a 3-candlestick trading pattern pointing to the imminence of a big-time reversal. It comprises a long bearish candlestick followed by a doji gapping down to form a doji star. Later on, a third white candlestick is formed. Its closing is well into the first period’s bearish body.

Morning doji star

The doji that get formed may be more than one or two. Their gaps are not meaningful. You are well advised to wait for confirmation as always.

• Morning star

First, we’ve got a long bearish body, a second teeny-weeny real body of either color, gapping down and forming a star. These two candlesticks define the basic pattern called ‘star’. The third candlestick is a bullish one which closes well into the first trading period’s bearish real body. The third stick indicates that the market is starting to turn bullish.

Morning star

The stars may be more than one or two. The color of the star and the direction of its gaps are of no importance. Confirm by a subsequent bullish candlestick with a higher close or an upwards gap.

• 3 inside up

3 inside up

The other name for this candlestick trading pattern is confirmed bullish harami pattern. (‘Harami’ means ‘pregnant’ in Japanese.) The third stick confirms the bullish trend reversal.

• 3 outside up

3 outside up

The other name for this candlestick trading pattern is confirmed bullish engulfing pattern. The third stick confirms the bullish trend reversal.

• 3 white soldiers

This Japanese candlestick pattern points to a strong reversal in the market. You will see three long sticks going up in steps. The opening of each trading session is a bit lower than previous close followed by a soaring rally to a new high.

3 white soldiers

The opening prices of the second and the third time periods can be anywhere within the previous day's body. In any case, you’d be better off if see the opening prices above the middle portion of the previous session's body. If the white candlesticks are too long, watch out. It could signal an overbought market. As always, it’s not a bad idea to wait for a confirmation (we keep repeating this for a reason!).

• Concealing baby swallow

We’ve got two bearish marubozus one after the other. The thirds stick shows prices went up during the third session but we driven down by sellers. After that there is another huge bearish marubozu. All of this might make traders who have been holding shorts to start covering their short positions and reverse the trend into a bullish one.

Concealing baby swallow

Make sure you wait for a confirmation of the new trend.