Gogo, Inc (GOGO), Lululemon Athletica, Inc (LULU), and Twitter, Inc (TWTR) have all formed bullish engulfing candlestick patterns on their daily charts. A bullish engulfing candlestick pattern forms when a small red candlestick is followed by a large green candlestick that has a body that completely engulfs the body of the previous day’s candlestick.

For the pattern to be valid, the engulfing candlestick must close above the highest price of the previous day’s candlestick, and the pattern is more powerful if it is preceded by a number of red candles.

A bullish engulfing candlestick pattern is often found at the bottom of a downtrend and can be a powerful reversal signal that the stock will begin to trade in an uptrend trajectory.

Candlestick patterns can be used to indicate the future price direction of a stock. Candlestick patterns are especially useful for technical traders when they are combined with other indicators such as larger patterns, trading volume, relative strength index (RSI), and divergences between RSI and price action.

The Gogo Chart

Gogo gapped down slightly on Friday but soared up 4.19% intraday to close the trading session at $12.94, which caused the stock to print a bullish engulfing candlestick pattern.

• On Friday, Gogo may have completed the right shoulder of a bullish inverted head-and-shoulder pattern, with the left shoulder created between Dec. 28 and Jan. 12, the head formed between Jan. 12 and Jan. 26, and the small right shoulder printed between Jan. 26 and Friday.
• If Gogo breaks up bullishly from the descending neckline of the pattern, the measured move, which is calculated by determining the distance from the neckline to the bottom of the inverted head, would be about 11%. This indicates Gogo could soar up toward the $15 mark.
• Gogo has resistance above at $13.19 and $13.79, and support below at $12.58 and $12.09.

The Lululemon Chart

Like Gogo, Lululemon gapped down slightly on Friday but climbed 3.06% intraday to close the session at $315.91, which was above Thursday’s high-of-day price.

• Lululemon has been trading in a falling channel since Dec. 30. The pattern is considered bearish until the stock breaks up bullishly from the upper descending trendline of the pattern. Lululemon closed Friday’s trading session slightly above the trendline.
• The stock must next regain the eight-day exponential moving average as support, which will give bulls more confidence going forward.
• Lululemon has resistance above at $329.54 and $347, and support below at $315.90 and $304.38.

The Twitter Chart

Twitter opened Friday’s trading session flat but shot up to close the day at $35.27, which was above Thursday’s highest price.

• Like Lululemon, Twitter has been trading in a falling channel since Nov. 29. On Friday, Twitter breached up through the median line of the pattern, but it has more work to do in order to potentially break up bullishly from the pattern.
• Twitter has resistance above at $35.65 and $37.37, and support below at $33.76 and $31.32.