ENGULFING CANDLE. Powerful reversal candlestick patternđź•Ż
âś…Candlestick patterns trading is one of the oldest but most effective ways to analyze the foreign exchange market. The trader needs to find certain patterns, and based on them, decide where the price will go. Today we will talk about one of these candlesticks, which is called the "engulfing candle". There are two types of it: bullish and bearish. The appearance of such a model on the chart with a high probability indicates a possible reversal of the trend and is a signal to enter the market.
Types of engulfing and their features
⚠️So, we realized that there are two types of this candle:
🟢Bullish. It indicates that the trend is turning towards an increase in the value of an asset or currency pair. The candle must engulf the range of the previous bearish candle to be valid.
🟢Bearish. The same as with bullish, only the opposite. It indicates that the trend is turning towards a decrease in the value of the asset. In this case, the candle must engulf the range of the previous bullish candle.
âś…The formation of the "Bullish engulfing" candle says that buyers have sat on the throne, and "Bearish" - sellers. Let's discuss the theoretical foundations of the pattern. In the case of the "bullish engulfing" pattern, everything will be the same, just the opposite.
Rules for the formation of the "bearish engulfing" pattern:
There should be a bullish trend in the market, and the price should be on a key level.
❗️A long-bodied bullish candle appears (that is, directed towards the trend). The opening of the second candle should be carried out with a gap relative to the closing of the first, and its body should be larger than that of the previous one. It seems to engulf the trend with its dimensions, and therefore it is necessary to sell (a bearish candle indicates the beginning of a downward trend).
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