Bullish Rejection Patterns are among the most famous reversal patterns in technical analysis that indicate the possibility of a trend reversal from bearish to bullish. Here’s an explanation of each pattern:
1. Three Green Soldiers
• Consists of three consecutive green candles, each opening within the body of the previous candle and closing higher than it.
• Indicates strong bullish momentum after a bearish trend.
• Entry is after the confirmation of the third candle.
2. Bullish Engulfing
• Consists of two candles:
• The first is a small red (bearish) candle.
• The second is a green (bullish) candle that completely engulfs the body of the red candle.
• Indicates the strength of buyers and a trend reversal.
• Entry is after the closing of the engulfing candle.
3. Morning Star
• Consists of three candles:
• The first is a long red candle (strong decline).
• A small candle (doji or reversal candle).
• The third is a long green candle that closes within the body of the first or higher than it.
• Indicates a bullish trend reversal.
• Entry is after the confirmation of the third candle.
4. Tweezer Bottoms
• Consists of two or more candles that have approximately the same bottom.
• Usually a bearish candle followed by a bullish candle.
• Indicates price rejection of the decline at a certain level.
• Entry is after the confirmation of the second bullish candle.