In our previous article, we discussed the history and anatomy of a candlestick in futures trading, but in this piece, we are going to use an intuitive analogy to help us picture the market psychology behind a bullish candle.

As hinted previously, a bullish candle represents the cumulative buying and selling efforts of traders over a period of time that resulted in buyers pushing price to close above the opening price. This is why this candlestick is seen as bullish and it usually has a green colour on most charting tools as it signals the victory of buyers over sellers.

Talking about victory, let's use an intuitive analogy to make things clearer.

Imagine that buyers and the sellers are in a fight. When the fight starts with the opening price, the sellers push the price down to new lows and lows till the lowest price, this happens as sellers keep selling the asset and this is what forms the lower wick or shadow as seen on a green bullish candle, but buyers resist the selling by buying the asset forcing price to climb back up and above the opening price. The buying momentum continues driving prices higher and higher. This is what forms the body of the candlestick-the continued buying pressure.This continues till the highest price point is discovered which is the high of the candlestick, but sellers once more resist by selling again to drive price down again and this action leads to the formation of the upper wick or shadow on any bullish candlestick. However, buyers push against this forcing the price to close above the opening price signaling victory for the buyers.

It is worth pointing out that a bullish or green candlestick can signal a potential market exhaustion and low buying momentum. For example, if a green candlestick has a longer upper wick and occurs at a key zone like a resistance level or supply zone, it could be a potential signal for a trend reversal. This is why a morning star at a key level is interpreted as signifying a potential trend change though a true morning star is bearish.

Let's call it a day here and watch out for the next episode on a bearish candlestick.