Bullish means expecting a price to rise; bearish means expecting it to fall. The pair of adjectives describes an expectation held by a trader, an analyst or the market as a whole. The metaphor comes from how the animals attack: a bull throws its horns upwards, a bear swipes its paws downwards.
Three different things people call bullish
The confusion around these words comes from the fact that they are applied to three unrelated objects.
- A candle or a pattern. A bullish candle is one that closed above its open. The label describes what already happened inside that single period — nothing more. The same applies to named formations, covered in the lesson on Japanese candlestick basics.
- A trend. A bullish trend is a sequence of higher highs and higher lows on the chart being looked at. Change the timeframe and the label can change with it.
- Sentiment. A bullish analyst, a bullish survey or bullish positioning describes an opinion or an exposure, not the chart.
These can contradict each other at the same moment. A single bullish candle can print inside a downtrend, and sentiment surveys can read bullish while price is falling. Whenever the word appears, the first question is which of the three objects it refers to.
Bullish is not the same as a bull market
"Bullish" is a description of an expectation about a specific instrument over a specific horizon, which may be an afternoon. A bull market is a state of a market that is usually discussed over months or years and is often defined by a set percentage rise from a low. Someone can be bullish on one currency pair for a day inside a market nobody would call a bull market, and bearish on a single instrument during one. The two ideas are separated in the entry on bull market and bear market.
What the word does not do
Bullish and bearish are labels for a view. They are not signals, they carry no probability, and they say nothing about whether a position taken on that view would end in a profit or a loss. A chart pattern described as bullish has no obligation to resolve upwards, and an analyst described as bullish is stating an opinion that can be wrong. Reading the word as an instruction is the most common mistake beginners make with it.
