3 Powerful Bullish Candlestick Patterns

Hi, welcome to this new video on bullish candlestick patterns. If you have not watched my previous video on the Japanese candlesticks, I suggest you to do that before watching this one. Because if you are not familiar with the Japanese candlesticks, you will not be able to understand fully what we are going to discuss today. I want to show you three candlestick patterns that can be used to have more confidence when you take a long position. So that's why they are bullish candlestick patterns. And the first one is called bullish pin bar is a one candle pattern, meaning is a single candle that forms this pattern. Then we have the one white soldier that is a pattern made by two candles. And then we have the morning star that is made by three. Again, these patterns should not be used alone. You should not base your decision of investing or trading just based on this pattern. It should be used together with other things. For example, you may use the indicators that I showed you in a previous video. You can use support and resistance that again we touch in other videos. And often these patterns are used together with the moving averages that again we have discussed previously. So let's start with the bullish pin bar. The bullish pin bar is a candle that can be like that. So it can be bullish actually or bearish. This one is a bullish candle. Remember it means that the open is here and this is the close. It can be something like that where the open is here and this is the close. Or it can be something like that where this is called dodgy is basically the open and the close are basically the same. Now even if this candle is not bullish like this case, it's still a bullish signal. Why? Because the meaning of this low tail is that bears were trying to push the price down, but then they were not able to hold the price at this level. And then eventually the close was way above the low. Now in order to define a bullish pin bar, usually what we want to see is that the lower tail is at least 60% of the length of the whole candle. Meaning this distance from the low in this case to the open, that is the lower tail, this length should be at least 60% of this. This is the whole candle. So the low to high. Okay, if you see this, if you see that this guy is at least 60% of this, then is a bullish pin. Now where do you want to see this pattern? Usually is good if you see this near a support and especially when you're doing trend following. Why only trend following and not counter trend? Because usually at least this is my preference. I don't think that a single candle pattern is very powerful. So when I'm doing counter trend, I want to see at least two candles, at least a confirmation that we have really reached a point where the price is having a reversal. So that's why I think bullish pin bar should be rather used for trend following. Another thing is that is better in my opinion if the low. So this point is lower than the previous low. Now I will show you an example of this. Before moving to, to that example, I just want to highlight this number because some people Instead of using 60%, they use 2 over 3, 2, 3. That is more or less the same. So you may find 60%, you may find this. I use 60%, but again you can also use this number. So let's move to the next slide and you can see an example here. Now this blue line is the 50 moving average. And as I said, it's good to see the bullish pin bar near the moving average or near a support. But in this case the moving average is a support because you can see there is this uptrend and the price was here is going up. Then it's touching the moving average. Here is testing here and what happens here? You can see this, this red candle here, this is a bullish pin bar. So we see a bullish pin bar testing the 50 moving average. And also we see that the low is lower than the previous low. So that's for me a good signal that okay, we can go long again we should use other things, indicators. But that's the kind of situation where I like to see the bullish pin bar. And why do we want to see the lower low? Because usually, as you may remember from other videos, the price is moving in waves, right up, down, impulse retrace. So we want to see the bullish pin bar at the end, at the end of the retracement. So in this phase of retracement, the price is going down, probably making lower high and lower low. That's why we want to see a lower low. Okay, and this is the bullish pin burn. So now let's move to the second one, one white soldier. As I said, this time we have two candles. Now let's look at the rules. Number one, the low is greater than the previous low. What does it mean, the low of this candle? Let's say this is today and this is yesterday. This low must be greater than this low. Okay, this is done. Now the close must be greater than the previous high. Now if you remember from my previous video, when we have a bearish candle, this is the open and this is the close. But for the bullish, this is the open and this is the close. So when I say that the close is greater than the previous high, I mean that this level must be greater than that. Okay, so this is done. Now the open of this candle must be greater than the previous close. So. So this open greater than the previous close. We want to see a bearish candle here followed by a bullish candle. Where do we want to see this pattern again? Near support for trend following like in the previous case. But now this is a two candlesticks pattern. So I'm also confident to use it when it's in a counter trend situation. And I'm going to show you an example in the next slide. Okay, as you can see here, the price is in a downtrend. So if we want to go long, we are doing a counter trend trade and see what happens. Here we have these two candlesticks, we have this one, a bearish candle and then we have this one that is a bullish candle. And this is exactly the one white soldier pattern. Now this is even more powerful. Why? Because you see that here the price was hitting this level and what happened is that the one white soldier happened exactly at that support level. So this is even more powerful. And also remember that if we are using this for counter trend, it's very possible that before you see this there was a drop in price. And if the drop is very big, it can be even better, a better indication that the price is bouncing back. But as you can see, it was just a temporary bounce because then the price continue to go down. So remember this is counter trend because we are going long against the trend. That's why we need to be more confident. Of course in this case you may notice that something like a bullish pin like this may also work. But what I have observed in my trading is that if we just rely on this bullish pin, but when we have a countertrend, most of the time what happens is that we have false signals. So I tend to use two or three candles when I want to go to have countertrend trades. Now let's move on to the morning star. The morning star is a three candlestick pattern. And what is the idea of the morning star? We have a first candle, bearish. So this one, then the third one is bullish. This one, the second candle can be any color. So this one is green, but it may have been red, it may have been a dodgy, so something like that is also possible. Now what do we want to see to identify a morning star? We want to see the second candle that is gapping down. What do I mean by that? Remember that for the green one, this is the open and this is the close. And when I say gap down, I want to see the open of this one below the close. Okay, so the price close here. Let's say this is daily candle. It closes here today and tomorrow will open below. So there is a gap. I also want to see a gap for the third candle. Okay, so actually sorry, this is the open and this is the close. So gap for the third candle, if it opens here, I want to see gap from the close. So it opens above the close. So to summarize, the first gap is because this candle will open below the close of the previous one. And a gap here is when this candle will open above the close of this one. So if you see this, then this is a morning stop. Again, as for the one wide soldier, this is good near support for trend following as also for the bullish pin bar. But it can also be used for counter trend trades. And again I want to show you an example. And the example is probably you have already identified, it is this one. You can see this is the candle one, this is the candle three, this is the candle two. And you see that this candle opened below the close of the first one and the third one opened above the close of the second one. And in this case it was another counter trend trade where we have a drop, then we see this pattern and then the price is going up. Okay, so let's recap what we have learned. First, we have seen three candlestick, three bullish candlestick patterns. The one white soldier, the morning star and the bullish pin bar. And the bullish pin bar is a single candle pattern, right? It's something like that. And the idea of the bullish pinball is since it's only one candle, I will just use for trend following. For counter trend I want something more powerful. So for counter trend I can use the one way soldier, that is two candles or the morning star, that is three. And of course we can also use morning star and one white soldier for trend following. So as I wrote here, the other two can be used for trend following and also for countertrend trade. And as I mentioned at the beginning, remember that it's not a good idea to just use this candlestick to decide to enter or exit the trade. I think it's better if you combine this with other indicators, moving averages or Fibonacci whatever, you whatever is part of your trading system. But a trading system should not be just candlestick. Okay, so this is also done and with this I would like to conclude the video. Thank you for watching. If you have any question you are you can comment this video and I will be happy to reply and see you next time.