Bullish Thrusting Candlestick Pattern – Trading Ideas And More

Bullish thrusting candlestick pattern: By examining historical trends, technical analysts predict changes in stock prices. Candlestick patterns are one such method, which examines price movement during a specific timeframe to identify historical trends and project future price movements, are a commonly utilized method in this analysis.

Making well-informed stock market investment selections requires the application of this technique. In this article, we will understand one of the frequently formed candlestick patterns called the Bullish Thrusting Candlestick Pattern.

Bullish Thrusting Candlestick Pattern – Definition

The bullish thrusting candlestick pattern is a two-candlestick pattern that market participants use to predict the stock price movement. The candlestick pattern consists of a long red candle followed by a green candle.

Here the green candle must open with a gap down and close above the close price of the red candle but below the midpoint of the red candle. It is preferable for Bullish Thrusting Candlestick Pattern to be formed in a downtrend. The formation of this pattern generally indicates a bullish reversal. However, this pattern can also indicate a bearish continuation. 

Bullish Thrusting Candlestick Pattern – Psychology

The prior trend before the formation of the Bullish Thrusting Candlestick Pattern is preferred to be a downtrend as the indication given by this pattern would work better. The formation of this pattern shows that the selling pressure has weakened and more buyers have entered the market. This buying pressure might continue to move the price higher and would mean the end of the downtrend.

Furthermore, the bullish thrusting candlestick pattern can also indicate that the buying pressure had increased for that duration, but since the second candle couldn’t close above the midpoint of the first candle, it would indicate that there was not enough buying pressure to move the price higher. Hence, the price would continue to fall.

Combining Bullish Thrusting Patten with other technical tools

Since the bullish thrusting candlestick pattern can give either a continuation or reversal indication, the market participants must be able to interpret the pattern appropriately to get the correct indication. The following is how market participants can better interpret this pattern:

1. If the RSI was also at the oversold region when the Bullish Thrusting Candlestick Pattern was formed, then the formation of this pattern would have a stronger reversal indication.
2. If this pattern was formed at a major support zone, then this pattern would have a stronger reversal indication.

Bullish Thrusting Candlestick Pattern – Trading Ideas

Traders who wish to trade based on the Bullish Thrusting Candlestick Pattern should ensure that the trend before its formation needs to be a downtrend. Once that is confirmed, the following are the guidelines for taking a trade:

• ENTRY: The proper entry would be to take a long position near the high price of the second candle of the bullish thrusting candlestick pattern. If the traders wish to take a safer entry, then they can wait till a candle closes above the high of the pattern and then take a long position.
• TARGET: Traders can exit the trade when the price of the stock reaches near the immediate resistance zone. Once this level is reached, they can also book partial profits in the trade and hold on to the remaining position until the next resistance level.
• STOP LOSS: Traders can place the stop loss near the low price of the bullish thrusting candlestick pattern.

Bullish Thrusting Candlestick Pattern – Example

In the above one-day chart of HDFC BANK, we can see the formation of the bullish thrusting candlestick pattern in a downtrend. As mentioned in the article, the price went up after the formation of this pattern.

At the time of the formation of this pattern, traders could’ve taken a long position at Rs. 1299.55, and the stop loss was at Rs. 1271.90

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Bullish Thrusting Candlestick Pattern – Limitations

Traders and market participants cannot solely rely on this pattern as this pattern gives an indication for both continuation and reversal. It might become difficult to guess which direction the market will move after the formation of this pattern. Sometimes the price also won’t have much movement after its formation and it also reverses quickly. 

Hence, market participants might find this pattern difficult to interpret and it is recommended to use other means of technical analysis to confirm the indication given by this pattern.

Failed Example Of Bullish Thrusting Candlestick Pattern

In the above chart of ICICI BANK, the time frame is 1 day. As you can see the upside thrust candlestick pattern was formed twice in this stock, but both times it failed to reverse the trend. In this scenario, this pattern resulted in a bearish continuation.

Bullish Thrusting Candlestick Pattern – Key Takeaways 

• It is preferable for the Bullish Thrusting Candlestick Pattern to appear in a downtrend.
• The first candle is a red, the second is a green candle that opens with a gap down and manages to close above the close price but below the midpoint of the first candle.
• It generally indicates bullish reversal but sometimes it can also indicate a bearish continuation.
• This pattern needs to be combined with other methods of technical analysis as it can give a dual indication.

Read more: Dark cloud cover candlestick pattern

Conclusion

This article covers the Bullish Thrusting Candlestick Pattern, which is a typical occurrence in the financial market. It specifies the conditions that must be met for a candlestick to be designated as a bullish thrusting candlestick pattern. Traders and investors can use this pattern to get insight into market activity and make better trading decisions.

Understanding this trend might assist market participants make more informed trading decisions. What are your views about this candlestick pattern? please let us know in the comment section below.

Written by Praneeth Kadagi

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