First let’s learn what bullish and bearish mean and then I will explain the differences of bullish and bearish candlesticks.
A market is bullish when it is going up and it has formed an uptrend. They call it a Bull market too. So, what is a bullish candlestick accordingly?
A bullish candlestick shows that the price has been going up, during the time that the candlestick was forming.
Each candlestick has a time frame that it forms in. For example, a daily candlestick takes one day to form, mature and close. Or a one hour candlestick takes one hour to mature. Each candlestick shows four prices within its time frame: Open, High, Low, Close
Bullish Candlestick vs Bearish Candlestick
After the above introduction, you can understand bullish and bearish candlesticks much better. As I mentioned, a bullish candlestick shows that the price has been going up, within the time frame that the candlestick was forming. It simply means that the close price of a bullish candlestick is higher than the open price.
Similarly, in a bearish candlestick, the close price is below the open price.
However, as there are different types and forms of candlesticks, and each of them look different (for example, some of them have a body and some don’t), it is important to know how the bullish and bearish forms of each type of candlesticks look. Let’s start with typical and regular candlesticks and see how their bullish and bearish forms look.
The image below shows the typical form of a bullish and bearish candlesticks. The left one that has a green body is a bullish candlestick and the right one is bearish. As you can see, it is just their close prices that are opposite positions. Usually, bullish candlesticks are green and bearish ones are red on trading platforms. However, they can have different colors too. For example, sometimes you see the bullish ones with white and bearish ones with black colors while the price chart’s background is usually white or black.
The presentation below shows the only difference between the typical bullish and bearish candlesticks. Move the slider to the right and left:
What about the other forms of candlesticks?
The only type of candlestick that there is no difference between its bullish and bearish types, is Doji candlestick, because it doesn’t have a body and its open and close prices are the same. The image below shows that there is no difference between the bullish and bearish forms of Doji candlesticks:
The other forms of candlesticks that have a body, even very small, are like the typical form that you saw in the examples above. In all of them, even when the body is very small, a bearish candlestick’s close price is below the open price, and vice versa in the bullish form of the same candlestick. For example, this is how the bullish and bearish forms of Hanging Man or Hammer candlesticks look:
How to Use Bullish and Bearish Candlesticks in Trading
Japanese candlesticks are the most accurate and real-time indicators for trading. All other indicators are lagging. Candlesticks tell you what’s going on in the markets in real time. They show you the sentiment and mentality of the big players of the markets, bulls and bears. When the market is bullish, you will see more and bigger bullish candlesticks with longer bodies, compared to bearish candlesticks. It is the other way round in the market is bearish: You will see more and bigger bearish candlesticks. How does this help you to take positions and make some profit?
There are zillions of candlesticks forms, patterns, signals, etc. If you sit and memorize all of them, you won’t be able to remember them and the signals they send you when you trade. The best strategy is to learn the best and the strongest ones that show you the strongest signals or trade setups. In the case of bullish and bearish candlesticks, the best and strongest one is the one that has a longer body. When you see a big bullish candlestick with a long body formed at the bottom of a downtrend or bear market, then most probably the market will reverse and will go up. It is the other way round when a big bearish candlestick with a long body forms at the top of an uptrend or bull market. They are both reversal signals.
A big and long bullish candlestick usually covers or engulfs several previous candlestick, and forms a pattern that is called Bullish Engulfing. If the bullish candlestick opens with a gap down and below the close price of the previous candlestick that is a bearish candlestick, and then it goes all the way up and closes below the open price of the previous candlestick, it will be called Piercing Line candlestick pattern.
Similarly, when a big and long bearish candlesticks covers or engulfs several previous candlesticks that are usually bullish, the pattern will be called Bearish Engulfing. If the bearish candlestick opens with a gap up and above the close price of the previous candlestick and then it goes all the way down and closes below the open price of the previous candlesticks, the pattern will be called Dark Cloud Cover.
These patterns are the strongest reversal patterns that bullish and bearish candlesticks form. You don’t even have to memorize their names. You just need to learn what a long candlestick tells you and where it can be used as a signal to trade. I will explain about these patterns in other articles. This article is only focused on the differences of bullish and bearish candlesticks. I think I have already explained enough about them.
Now test yourself to see whether you have learned what bullish and bearish candlesticks exactly are.
Where’s the candlestick high price?
Where’s the candlestick low price?
Where’s the candlestick open price?
Where’s the candlestick close price?