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CANDLESTICK PATTERNS BASICS | Engulfing Candle 📚



Hey traders,


In this educational post, I want to discuss with you one of the most accurate REVERSAL candlestick patterns - the engulfing candle.


On EURUSDchart, I spotted for you bullish & bearish examples of this pattern.


The logic behind this pattern is quite simple:


⭐️In a bullish trend , after a strong directional movement , the price reaches some important structure level. Growing steadily and forming a sequence of green bullish candles the price suddenly forms a strong bearish candle.

What is particular about that candle is the fact that its total range (distance from the wick high to wick low) & body range (distance from body open to body close) exceed the ranges of a previous bullish candle.


🔻Such a candle we will call a bearish engulfing candle.


Most of the time it signifies a strong spike in selling volumes and willingness of sellers to push.


With a high probability, such a formation leads to a pullback or even a trend reversal.



⭐️In a bearish trend , after a strong short rally, the price reaches some demand cluster. Instead of breaking that and going lower, the price forms a strong bullish candle.

That candle engulfs the range of the previous bearish candle & its body size exceeds the size of the previous candle.


🟢Such a candle we will call a bullish engulfing candle.


Quite often such a formation leads to a pullback or even a trend reversal.



🔔And there is just one single tip that will dramatically increase your performance trading the engulfing candle:

It is recommended to rely on this pattern ONLY IF it is formed on a key level:


❗️Bullish engulfing candle must strictly form on a strong support.

❗️Bearish engulfing candle must strictly form on a strong resistance.


Forming beyond key levels, the pattern occasionally will give false signals.


⏳Preferable time frames to trade engulfing candles are daily/4h.


Learn to spot this pattern & you will see how efficient it is.


What candlestick patterns do you want to learn in the next posts?

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