Engulfing Candle Pattern : Easy Observed Trading Pattern and High Probability
Engulfing candle trading patterns are often found when we trade forex, both on the daily time frame or at a lower time frame. Daily traders often take advantage of this pattern as a signal for entry. Besides being easy to observe, the probability of trading with an engulfing candle pattern is quite high, especially in a trending market situation. There are 2 types of engulfing candle patterns, namely bullish engulfing patterns and bearish engulfing patterns.
Bullish Engulfing pattern
This pattern is a signal to open long positions. To obtain accurate results, it should be ensured that market movements are truly in a trending state, not sideways or consolidated.
The first candle must be bearish candle (the white color in the image below) and the next candle (engulfing candle) must be bullish candle (blue) with a longer body.
Bearish Engulfing Pattern
This pattern is a signal to open short positions. Same with a bullish engulfing, to get accurate results it should be ensured that the market is truly trending. The first candle must be bullish candle (blue in the image below) and engulfing the candle must be bearish candle (white) with a longer body.
In a trending market, this pattern implies a trend reversal , because it shows a strong momentum shift from sell to buy in a downtrend, or buy to sell in an uptrend. The stronger the trend, the higher the probability. In addition, this pattern will be more accurate at a higher time frame.
Examples of trading with engulfing patterns:
So how do you understand the engulfing candle pattern? Well then, you are ready to trade again.