A blue bar is not always bullish. Why? Because a small blue bar at resistance looks like weak buying. When buying is weak, the next move is often lower. And here the last two bars are smaller blue under resistance which increases risk of holding long positions. This does not look bullish to me which is why I recommended to reduce risk on the close of this bar.
In this chart, we can see small blue bars at resistance to be followed by red bars several times:
1. 3/25/2012 small blue bar at high, followed by 2 red bars.
2. 12/4/2011 small blue bar under 50MA, followed by larger red bar.
3. 11/6/2011 small blue bar under 50MA, followed by 2 large red bars.
4. 7/3/2011 small blue bar near highs, followed by red bar.
5. 8/1/2010 small blue bar at 20MA resistance, followed by 3 red bars.
6. 5/9/2010 small blue bar under 20MA, followed by a larger red bar.
That said there are times when market pauses at a resistance level and then continues higher, such as 2/19/2012 to 3/4/2012. But the last week of those 3 bars did have a shakeout drop which is easier to see on the daily chart. There was also a smaller blue bar in front of resistance at 10/17/2010 but the move was a breakout up. This could still happen next week; but odds have decreased.
There are also times with a small blue bar in the middle of a trend. If there is no clear resistance level (can be a Fib level, moving average or Bollinger band) then it is not as important.
If you really think about it this is a nifty idea. A small blue bar when markets are at resistance, are overbought or near key previous highs is often followed by selling. So this means that sometimes a small red bar is actually more bullish than a blue bar. Because if there is not much selling pressure at a resistance level, market is free to resume higher. Examples of this are:
1. 6/17/2012 smaller red bar under 20MA resistance, followed by a blue bar.
2. 12/25/2011 smaller red bar under 50MA resistance, followed by a move above and multi-week rally.
3. 9/25/2011 smaller red bar under resistance, result next move lower lows that were bought big.
4. 11/21/2010 smaller red bar on support which can be a very bullish combination as the next bar shows.
So, sometimes a blue bar is not bullish and a red bar is not bearish. It depends on the context of the chart and whether markets are at support or resistance.