Three bullish trend candlestick combinations: morning star, bullish engulfing, tower bottom, easy to understand and greatly improve your win rate.

1. Bullish Candlestick Pattern - Morning Star

The night is about to pass, and a beautiful day is about to begin. The appearance of the morning star indicates that the price of the coin will usher in a round of upward trends.

What kind of candlestick combination is a morning star? As indicated by the red lines in the figure.

The standard morning star consists of three candlesticks: first a large bearish candlestick, followed by a candlestick resembling a 'doji' star, and the third candlestick is a large bullish candlestick. The establishment of the morning star has specific requirements for the length of the third bullish candlestick, which must have a closing price above 50% of the first bearish candlestick's body.

After confirming the effectiveness of the morning star, we can also judge the strength of the bullish momentum by the closing price of the third bullish candlestick. As shown in the figure, if the closing price of the bullish candlestick is just above the 50% threshold, then the bullish strength is relatively weak. If the closing price of the following bullish candlestick matches the opening price of the previous bearish candlestick, it indicates strong bullish strength. If the closing price of the following bullish candlestick is significantly higher than the opening price of the previous bearish candlestick, the bullish strength is even stronger.

What has just been discussed is the most standard morning star combination, but in actual market movements, the morning star will have some variations. So what does a real morning star look like in the market?

For example, the three types of morning stars illustrated. In Figure 1, it is not a 'doji' star, but more like a 'T' candlestick. We will restore it to the real price chart.

The price of the coin has dropped significantly, forming a morning star, followed by a rebound in the coin price.

Figure 2, formed by two small candlesticks in the middle. A morning star appears during the upward movement, and the coin price continues to rise.

Figure 3, consisting of three small candlesticks or stars. The price of the coin drops significantly, a morning star appears, and the price then reverses.

2. Bullish Candlestick Pattern - Bullish Engulfing

First, let's look at the characteristics of the bullish engulfing. The last bullish candlestick's body completely covers the previous bearish candlestick's body, as if the bearish candlestick has been devoured by the bullish one, indicating a strong counterattack by the bulls. Hence, it is named bullish engulfing.

How to judge bullish strength?

Figure 1, the bullish candlestick's body just engulfs the preceding bearish candlestick's body, indicating the weakest bullish strength; Figure 2, the bullish candlestick's body is significantly higher than the preceding bearish candlestick's body, even reaching double the previous bearish body, indicating strong bullish strength; Figure 3, the bullish candlestick's body completely engulfs multiple preceding bearish candlesticks, indicating the strongest bullish strength.

There are many non-standard bullish engulfing patterns in the market. So what does the actual 'bullish engulfing' look like?

For example, the three types of bullish engulfing patterns illustrated do not require the bullish candlestick to completely engulf the shadow of the previous bearish candlestick.

Figure 1, after a significant drop in the price of the coin, a bullish engulfing pattern appears, followed by a stop in the drop and a substantial rebound;

Figure 2, a large bullish candlestick engulfs two small bearish candlesticks, forming a bullish engulfing pattern, followed by an upward trend;

Figure 3, the bullish candle completely engulfs three bearish candles, leading to a significant rise in the market.

3. Bullish Candlestick Pattern - Tower Bottom

Tower bottom: on the left is a medium bearish candlestick or a large bearish candlestick; the middle consists of several small candlesticks, usually more than five; on the right is a medium bullish candlestick or a large bullish candlestick. Overall, it looks like an inverted pagoda, hence the name tower bottom.

An effective tower bottom must meet the condition: the closing price of the last bullish candlestick must exceed 50% of the preceding large bearish candlestick's body. The tower bottom shows that the short-selling strength in the market is gradually weakening, leading to a balance of buying and selling forces, and ultimately to a strengthening of bullish momentum.

After confirming the effectiveness of the tower bottom, we can also judge the strength of the bullish momentum by the closing price of the last bullish candlestick. As shown in the figure, if the closing price of the bullish candlestick is just above the 50% threshold, then the bullish strength is relatively weak. If the closing price of the following bullish candlestick matches the opening price of the previous bearish candlestick, it indicates strong bullish strength. If the closing price of the following bullish candlestick is significantly higher than the opening price of the previous bearish candlestick, the bullish strength is even stronger.

Of course, in actual market movements, the tower bottom is not as perfect as shown in our illustration. So flexibility is key. Let's take a look at what the actual 'tower bottom' looks like in the market.

Variation 1, the actual appearance is very close to the schematic diagram of the tower bottom. The screenshot is taken from the EOS/USDT 6-hour candlestick chart, where the tower bottom appears during an upward trend, further establishing the advantage for the rise, followed by a clever upward trend.

Variation 2, the middle part of the tower bottom is not composed entirely of very small candlesticks; the candlestick fluctuations are relatively large. The screenshot is taken from the EOS/USDT 12-hour candlestick chart, where a tower bottom forms after a significant price drop, leading to a reversal.

Review of this issue:

Three typical bullish candlestick combinations. The first is the morning star, signaling brightness; the second is the bullish engulfing, where the bearish strength is quickly overpowered by the bulls; the third is the tower bottom, showing the steady advance of bullish strength.

This section of the course ends here. In the next lesson, we will share insights on bearish candlestick patterns.