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7 Powerful Bullish Chart Patterns

Patrick Stockdale
Written by Patrick Stockdale | April 7, 2022

Bullish chart patterns are technical analysis chart patterns that form on price charts of financial markets. They signal that the price of the market could rise/go higher.

Traders and investors use these bullish chart patterns to find buying signals in financial markets.

The 7 top bullish chart patterns are:

  1. Bull Flags
  2. Cup & Handle
  3. Inverse Head & Shoulders
  4. Ascending Triangle
  5. Rounding Bottom
  6. Falling Wedge
  7. Falling Channel Break

The bullish chart patterns are of two types, continuation patterns which means the chart pattern is indicating that the price will continue higher in the same price trend and reversal patterns.

Bullish reversal patterns are patterns that indicate that the price of a market will reverse from a bearish downtrend to a new bullish uptrend.

Bull Flags

Bull flag patterns are continuation bullish chart patterns formations that resemble a flag, hence the name "bull flag".

Bull flags form when the price action in a financial market is trending up and there is a price consolidation period.

A bull flag consists of 3 lines: a pole, resistance level and support level.

A visual representation of a bull flag is below.

Bull Flag Chart Pattern Example

A bull flag offers traders and investors a buying signal when the price breaks out above the resistance level of the flag.

Stop-losses are placed at a swing low level or at the support level of the flag.

This will depend on the individual trader's risk tolerances.

Cup And Handle

A cup and handle pattern is a bullish chart pattern that resembles a cup with a handle.

A cup and handle pattern can form either at price reversals of bearish price trends or as a continuation of a bullish price trend.

A cup and handle consist of price action on the left side or the "cup" shaped like a U with price action on the right side shaped like a smaller U or a "handle" and a clear resistance level on top of the cup with handle.

A visual representation of a cup and handle is below.

Cup and Handle Chart Pattern Example

A cup and handle offers traders and investors a buying signal when the price of a market breaks out above the resistance level of the cup and handle.

Stop-losses are placed at the nearest swing low level or at the low of the handle part of the chart pattern depending on an individual trader or investor's risk tolerance.

Inverse Head & Shoulders

An inverse head and shoulders pattern is a bullish reversal price chart pattern that resembles a head with shoulders turned upside down.

An inverse head and shoulders pattern consists of 4 parts, a left shoulder where the price action is shaped like a small U shape, a head where the price action is shaped like a larger U shape, a right shoulder where the price again is shaped like a small U shape and the neckline which is the resistance level.

A visual representation of an inverse head and shoulders pattern is below.

Inverse head and shoulders chart pattern example

An inverse head and shoulders pattern offers a buying signal when the price of a financial market breaks out above the "neckline" resistance level.

Stop-losses are placed at a nearby swing low or at the right shoulder swing low level depending on a trader's risk tolerance.

Ascending Triangle

An ascending triangle pattern is a bullish continuation chart pattern that forms when the price is trending up and there is a period of price consolidation in the market.

An ascending triangle consists of two lines, an upper resistance level that connects the lower swing highs together in the price consolidation period and a flat support level that connects the swing lows together in a horizontal line.

A visual representation of an ascending triangle is below.

Ascending triangle chart pattern example

An ascending triangle offers a buying signal when the prices breaks out above the resistance level of the pattern.

A stop-loss is placed at the swing low of the ascending triangle or just below the breakout price level depending on a trader's risk tolerance.

Rounding Bottom

A rounding bottom pattern is a bullish reversal chart pattern that resembles a "U" shape on the price chart with a clear level of resistance on top of the U.

A rounding bottom consists of two drawings, A U shape and a horizontal resistance level.

A visual representation of a rounding bottom chart pattern is below.

Rounding Bottom Bullish Chart Pattern Example

A rounding bottom pattern offers a buying signal when the price of the market breaks out through the resistance level of the chart pattern.

Stop-losses are placed at the nearest swing low or at the low of the U shape.

However, as the U shape tends to be quite far from the breakout level, placing stop-losses at this level is not common.

Falling Wedge

A falling wedge pattern is a bullish price reversal chart pattern that forms when the price of a market is declining and there is a tightening or converging of the trend lines between the lower highs and the lower lows.

A falling wedge consists of two lines, a declining resistance level that connects the lower highs together and a tightening support level that connects the lower lows together.

A visual representation of a falling wedge is below.

falling wedge pattern example

A falling wedge offers a buying signal when the price breaks out above the resistance level.

A stop-loss is placed at the nearest swing low or at the support level of the falling wedge.

Falling Channel Break

A falling channel break is a bullish price reversal chart pattern that forms when the price of a market is in a bearish downtrend in a channel and the price breaks out of the channel.

A falling channel consists of two lines, a downtrending resistance line connecting the lower highs together and a downtrending support level connecting the lower lows together.

falling channel pattern example

A buying signal occurs when the price of the market breaks out of the channel.

A stop-loss is placed at a nearby swing low or at the low of the channel support level.

Another common stop-loss placement strategy is to set the stop loss halfway between the support and resistance level of the channel.

Summary

Bullish chart patterns are a great way for traders and investors to buy a financial market from a low-risk entry point.

New traders should attempt to practice by trying to find these bullish chart patterns in any market from stocks to currencies.

Use a demo trading account to practice buying these chart patterns when they break out.

A demo account is a simple risk free way for new traders to learn how to trade these patterns.