Signing: To sign happy, take your extended hand and brush it in little circles up your chest a couple of times.
The sign for happy is very similar to the sign for excited. I tend to just choose one of those two signs and use it for both.
Usage: Teach your baby the sign for happy by making the sign whenever your baby is visibly happy or excited. Remember, when making the sign for happy, it is important to emote happiness.
Flash Card: Click the link to view the Happy Baby Sign Language Flash Card. The flash cards are printable and available in both U.S. Letter and A4 sizes.