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Engulfing pattern is a candlestick pattern
1. Negative trend.
2. Current green body covers the previous day’s red body completely.
3. Volume might be high.
buy at the top of today/yesterday and stop loss is the bottom.
Engulfing pattern is reversal trend pattern
Condition of Bull : the price is falls continuously and one day it rises dramatically (Green pattern cover the full body of red body)
Condition of bear : The price is rises continuously and one day it falls dramatically (Red body cover the full body of green body)
Create long position in bull ,create short position in bear
two types of engulfing pattern
1. Bullish engulfing pattern: is a reversal pattern, occurring at the bottom of a downtrend and close of day 2 is higher than open of day 1.(covers the red candle by green candle). A trader might buy at the close of day 2, when prices goes upward from the gap down in morning.2. Bearish engulfing pattern: is a bearish reversal pattern, occurring at the top of an uptrend.(covers the green candle by red candle). A trader might sell at the close of day 2 due to the large move downward in price.
Engulfing pattern is a trend reversal pattern in which the second candlestick completely engulfs the first candlestick.
Bullish Engulfing Pattern:
1.The prior trend should be a downtrend.
2.The first candle should be red in colour while the second candle should be green in colour.
3.The body of the second candle should completely engulf the body of the first candle.
4.The trader should buy after the price crosses the high if the second candle and should have a stoploss of the low of the two candles.
5.Volume is expected to increase in any of the two days.
Bearish Engulfing Pattern:
1.The prior trend should be an uptrend.
2.The first candle should be green in colour and the second candle should be red in colour.
3.The second candle should completely engulf the first candle.
4.The trader should go short after the price crosses the low of the second candle and should have a stoploss as the high if the two candles.
5.Volume is expected to increase in any of the two days.
Engulfing pattern is a trend reversal pattern in which the second candlestick completely engulfs the first candlestick.
Bullish Engulfing Pattern:
1.The prior trend should be a downtrend.
2.The first candle should be red in colour while the second candle should be green in colour.
3.The body of the second candle should completely engulf the body of the first candle.
4.The trader should buy after the price crosses the high if the second candle and should have a stoploss of the low of the two candles.
5.Volume is expected to increase in any of the two days.
Bearish Engulfing Pattern:
1.The prior trend should be an uptrend.
2.The first candle should be green in colour and the second candle should be red in colour.
3.The second candle should completely engulf the first candle.
4.The trader should go short after the price crosses the low of the second candle and should have a stoploss as the high if the two candles.
5.Volume is expected to increase in any of the two days.
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