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There are several key bullish candlestick patterns that traders commonly use as signals to either enter buy trades or close out existing short positions. While it's impossible to pinpoint one as the most popular, outlined below are some of the bullish patterns most often noted by market analysts.

Bullish Engulfing Pattern

The bullish engulfing pattern is almost universally recognized as a bullish reversal signal by traders of stocks, futures and forex. It is often the basis for adopting a trade position. The pattern consists of two candlesticks. The first is a down candle with at least a moderate-length body; it cannot be a doji candle with identical open and close. The second is an up candle with a body that completely engulfs the body of the first candle, opening below the first candle's close and closing above the first candle's open. The pattern is considered stronger when the second candle completely engulfs the body of the first candle and the first candle's entire range.

Piercing Pattern

The piercing pattern is another two-candlestick pattern that is very similar to the bullish engulfing pattern. The first candlestick in this pattern is a long down candle that closes near its low. The second candlestick gaps lower on open, but it closes higher than the halfway point of the first candle's body. The shadows on both candlesticks are usually small and not considered especially significant. The key element of this candlestick formation is that, like the bullish engulfing pattern, it shows a definitive shift from selling pressure to buying pressure.

Hammer Up Pattern

The hammer up pattern is formed by a single candlestick with a small body, a long shadow on the bottom side and a very small topside shadow. Ideally, the lower shadow should be at least two times the length of the candle body, made up of one candlestick, white or black, with a small body, long lower shadow, and a small or nonexistent upper shadow. The lower shadow should be at least twice the length of the body, and the high/low range should be relatively large.

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