There are three types of single bullish candlestick patterns:

a)            The hammer

b)            The inverted hammer

c)            The white marubozu

a)      The hammer

The hammer, so named because the market is hammering out a bottom, is a single bullish candlestick pattern that forms when a currency pair is trending downwards.

As the price of a currency falls, a hammer formed indicates that the bottom is near and the price is about to reverse to the upside again.

The long lower shadow points that bears managed to sink the price lower, but the bulls managed to overcome them to make the price close near the open.

How to identify a hammer

• The length of the long lower shadow is about two or three times of the real body
• It has a small or totally lack the upper shadow
• The real body is found at the lower end of the trading range
• You should not lay much emphasis on the color of the real body

Important notes:

If you spot a hammer on a chart, or any other pattern, when trading forex, it is not a guarantee to rush and place a buy order.

Before you jump into the bullish bandwagon, you need to get a confirmation. You should also not forget to check the fundamentals if they favor your trade.

• An example of a confirmation would be to wait for a bullish candlestick to close above the open to the right side of the hammer before you pull the trigger.
• If a candlestick pattern has not been confirmed, you should consider it to be neutral and not trade worthy.
• Sometimes candlestick patterns do not form perfectly, but they still give good trade signals. Nothing is perfect in this world, and candlestick chart patterns are not excluded as they did not originate from Mars.

b)      Inverted hammer

The inverted hammer appears on a chart when there has been a downtrend. And, its formation signifies the possibility of a reversal taking place.

Its long upper shadow shows that the bulls tried to bring the price higher. However, the bears observed what their enemies were doing and tried to gather energy to bring the price back down.

Eventually, the bulls managed to win this battle and brought the price to close the session near the open.

As such, since the bears were defeated to close the price any lower, it is a good hint that everyone who wanted to sell has completed his or her selling spree. Therefore, only the bulls are left to enjoy the ride.

It is also important that you wait for a clear confirmation before you place an order based on the inverted hammer signal.

How to identify an inverted hammer

• The length of the upper shadow is about two or three times of the real body
• It has a small or totally lack the lower shadow
• The real body is found at the lower end of the trading range
• You should not lay much emphasis on the color of the real body

c)       White Marubozu

In the Japanese language, the word marubozu means “close-cropped.” It’s also usually referred to as “shaven head” or “shaven bottom.”

Typically, a white marubozu has a long white body with no shadows either on the upper end or on the lower end.

The white marubozu shows that the opening price is the same as the low price and the closing price is the same as the high price.

Therefore, it is a very strong bullish candle, as it indicates that the bullish pressure took control of the entire session.

In most cases, the white marubozu is seen as the first part of a bullish continuation or a bullish reversal pattern

How to identify a white marubozu

• It has a long white body
• Neither the upper shadow nor the lower shadow is present

Summary

There are three types of single bullish candlestick patterns: hammer, inverted hammer, and white marubozu.

You can comfortably spot profitable trading opportunities in the forex market if you know how to identify their formation.