Here's an explanation of each bullish candlestick pattern, including how they form and their implications:
1. **Bullish Engulfing**
- **Structure**: A small bearish (red) candle followed by a larger bullish (green) candle that completely "engulfs" the previous candle's body.
- **Significance**: Indicates a reversal from a downtrend to an uptrend as buyers overpower sellers.
2. **Hammer**
- **Structure**: Small body at the top, long lower wick (2-3x the body), and little/no upper wick. Forms after a downtrend.
- **Significance**: Sellers push prices lower, but buyers rally to close near the open, signaling potential reversal.
3. **Morning Star**
- **Structure**: Three candles:
1. Long bearish candle.
2. Small-bodied candle (e.g., Doji) that gaps down.
3. Long bullish candle closing into the first candle's body.
- **Significance**: Signals reversal after a downtrend; the "star" shows indecision before buyers take control.
4. **Piercing Pattern**
- **Structure**: Two candles:
1. Long bearish candle.
2. Bullish candle that opens below the prior close but closes above the midpoint of the first candle's body.
- **Significance**: Suggests buyers are gaining strength, indicating potential reversal.
5. **Marubozu**
- **Structure**: Long bullish candle with **no wicks** (opens at the low, closes at the high).
- **Significance**: Strong buying pressure; confirms bullish momentum.
6. **Three White Soldiers**
- **Structure**: Three consecutive long bullish candles. Each opens within the prior candle's body and closes near its high.
- **Significance**: Indicates sustained buying pressure and a strong uptrend.
7. **Bullish Harami**
- **Structure**: Small bullish candle entirely within the body of the preceding large bearish candle.
- **Significance**: Suggests selling pressure is weakening; possible trend reversal.
8. **Inverted Hammer**
- **Structure**: Small body at the bottom, long upper wick, and little/no lower wick. Forms after a downtrend.
- **Significance**: Buyers attempt to push prices up but face resistance; reversal likely if confirmed by a bullish follow-up.
9. **Tweezer Bottom**
- **Structure**: Two candles (first bearish, second bullish) with **identical lows**. The second candle "tests" the same low as the first.
- **Significance**: Indicates strong support at that price level, hinting at a reversal.
**Key Notes**:
- These patterns are more reliable when confirmed by subsequent bullish price action (e.g., higher closes).
- Always consider volume and broader market context for stronger signals.
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