Bullish Separating Lines

The Bullish separating lines is a candlestick continuation pattern. It signals that a strong up trending stock is likely to rally.

This pattern consists of two different candlesticks. The first candlestick is a large down day. The second day the stock gaps up and opens at the opening price of the first day. Then the stock rallies without having a lower shadow.

Why is the bullish Separating Lines a bullish pattern? The first day the stock pulls back a little. When it opens higher and continues to head up that signals the pullback is over. It also shows that the stock has not broken its uptrend which is always bullish.

The fact that the 2nd day does not have a lower shadow in it means that there was not much opposition for the bulls as they continue to push the stock up higher.

This can be a very bullish signal, since it is natural for up trending stocks to have some sort of a pullback; if the pullback lasts only 1 day it could indicate that the uptrend on the stock is very strong.

An aggressive trader might enter the stock during the second day in hopes for catching some of the move in the second day as well as some of the upward movement later on. A more conservative trader may want to combine this signal with other signals to confirm that this is indeed a buy signal.

Other Candlestick Patterns

Here are a few other patterns that can indicate a short term move in a stock.

Bullish Meeting Lines - A bullish pattern

Bullish Kicking - A very similar pattern

Piercing Line - A Bullish Reversal pattern