Skip to main content

What are Bullish Candlestick Patterns & How Do You Read Them?

 Bullish Patterns are universal patterns that candlesticks can follow that signify an upwards movement of share price. Identifying these patterns may help when trying to predict which direction a stock price will go. However, it is important to remember that even though a pattern begins to form, it does not always need to finish. There is no guarantee that a pattern will follow through to the end. 

With that being said, here are some of the most popular Bullish Patterns:


Bullish Engulfing

    A Bullish Engulfing pattern is when a green candle completely encases the previous red candle. In the example above, you can see the green candle is above the top and below the bottom of its previous red candle. This is one of the shortest Bullish patterns out there, but it can be really useful for determining price direction early on.

Bull Flag

    A Bull Flag is another one of the most common Bullish patterns because of its quick buying and selling opportunity. As you can see above, the candlesticks see an upwards trend and then form new lines of support and resistance. This provides great opportunities to buy low and sell high. Many investors follow a strategy of buying when the candlestick hits support and selling when it hits resistance. Since the "flag" part of the pattern often repeats itself, you may have the opportunity to trade the same pattern multiple times.

Cup and Handle





    Above is an example of a Cup and Handle pattern. Many investors like this pattern because of the multiple buying and selling opportunities, similar to the Bull Flag. As you can see, the first part of the pattern is a steady decline which then flattens out. Some investors like to buy this flattening and then sell after the next part of the pattern, which is the steady increasing until the "handle." After the steady decline, the "handle" is formed by new lines of support and resistance and becomes similar to a Bull Flag. Many traders also like to buy and sell here for the same reason they like Bull Flags. It allows you to buy at support and sell at resistance. Therefore, you are able to trade the same pattern multiple times again.

Ascending Triangle

    Above is an example of an Ascending Triangle pattern. You might have noticed that it is very similar to the Bull Flag pattern. The only difference is the direction of the trend lines. In this case above, the line of resistance is flat while the line of support is slanted. Many investors like this pattern for the same reason as the Bull Flag, that being its multiple trading opportunities. This pattern also allows you to buy at support and sell as resistance. However since the line of support is slanted, each trade becomes less and less profitable. Therefore, it is important not to over-trade an Ascending Triangle pattern.



    Now, you hopefully understand how to recognize and read some of the most popular Bullish Patterns. There are many other Bullish Patterns you can capitalize on so if you want to look more into this, feel free to research more. Just as another quick reminder, there is no guarantee that a pattern has to finish once it has begun forming. Trading patterns is risky and not always successful for some traders. It is important to understand this risk and do more research into a stock before just buying it for its pattern.












Popular posts from this blog

What is Catalyst Trading? - How to Trade Upcoming Events

 Catalyst Trading is when you play off of the hype in anticipation to an event that affects a stock's price. This is a very simple way to try to capture profits in, usually, a smaller time frame than most investments. There are many different types of catalysts that can cause a stock price to increase and there are many resources to use to find these catalysts. It is important to understand that just because there is a catalyst, it does not mean that the stock price will be affected by it. When researching into different catalysts, it is clear that some provide higher returns than others. Also, it is important to research into the stock that has the catalyst. An easy way to tell if it is worth investing is looking into that specific stock's previous catalysts. If that stock has previously reacted positively to catalysts, then it is reasonable to assume it will do so again.  With that being said, let's look into some different types of catalysts that are easy to track: Earni...
Read more

What are Screeners & How Do You Use Them?

 A screener (or scanner)  is a tool that allows you to sort through the market to find stocks with certain criteria. Just like indicators , screeners are part of your preference and just because someone else likes a screener and has success with it, it does not mean you will certainly find success with it. It is important to explore screeners and do your own research and testing to find which screeners are the best for you. In this section, I will give some basic ideas of how to find good stocks using a screener. Where Do You Find Screeners?      Many screeners must be paid for but there are some that are free to use. On top of this, when looking for a screener you want to decide if you want to use a passive or active screener. A passive screener  is always finding new stocks that fit your specific criteria, but the free ones offered often do not have as many filters available to them. An active screener  is not constantly updating but usually hav...
Read more

What are ETFs & How Do You Trade Them?

 An Exchange Traded Fund (ETF) is similar to a Mutual Fund in the fact that it is a group of stocks that you can buy through one ticker symbol. However, ETFs usually often contain stocks that all have something in common (Such as an index, market, etc.). They are popular for investors who want to trade both in the long-term and the short-term, depending on which ETF you choose to invest in. In this article, we will discuss different types of ETFs and how to trade some of them efficiently. Index ETFs     One of the most common ETFs that are used/recommended by many investors are Index ETFs. Index ETFs  are a group of stocks that are included in one popular index that you can invest in, basically allowing you to invest in an index. One of the most common Index ETFs is the S&P 500 ETF. Three of the most popular S&P 500 ETFs are: 1.)  SPDR S&P 500 ETF Trust (SPY) 2.)  Vanguard S&P 500 ETF (VOO) 3.)   iShares Core S&P 500 ETF (IVV)...
Read more