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This is the case where a candle stick completely covers the body of the previous day candle stick.
Conditions to Qualify :-
1. There should be continuous trend (bullish or bearish) atleast 3 to 4 days and a sudden reverse pattern.
2. There should be an engulfing pattern in the reverse point.
3. High volume should be there.When to buy and sell :-
1. the next day, at the price above the highest point of the current candle stick.
2. Stop loss , at the lowest point of the current candle stick.
3. sell :- buy price + (buy price – stop loss)engulfing pattern is classified into two types bullish and bearish
conditions:
1.there should be significant price fall.
2.it should cover the previous body.
3.we can buy when the price goes beyond the previous upper tail and we can sell if it goes below the lower tail.
When a candlestick completely engulfed the previous candlestick it is engulfing pattern
Engulfing pattern is a reversal candlestick pattern.
Bullish Engulfing Candlestick Pattern is a bullish reversal pattern, usually occurring at the bottom of a downtrend. The pattern consists of two Candlestick, small bearish candle stick on day one and a bullish candle on day 2. The bearish candle real body of Day 1 is usually contained within the real body of the bullish candle of Day 2.
Condition for Bullish Engulfing :
1. The recent fall in price should be witnessed.
2. The bullish body should cover the previous days bear body.
3. There should be significant volume should be noticed during the formation of engulfing.
We can create a long position after the bullish engulfing pattern is formed with significant volume.
Bearish Engulfing Candlestick Pattern is a bearish reversal pattern, usually occurring at the top of a uptrend. The pattern consists of two Candlestick, small bullish candle stick on day one and a bearish candle on day 2. The bullish candle real body of Day 1 is usually contained within the real body of the bearish candle of Day 2.
1. The recent uptrend should be witnessed.
2. The bullish body should cover the previous days bear body.
3. There should be significant volume should be noticed during the formation of engulfing.
We can create a short position after the bearish engulfing pattern is formed with significant volume.
Engulfing pattern:
Bullish:
It is a reversal pattern after a recent price fall. The green body of the engulfing pattern should cover the entire previous day body. Increase in the volume is expected.
Buy: when the price goes above the previous high and stop loss when it goes below the previous low. reward = risk taken
Bearish:
It is a reversal pattern after a recent increase in price. The red body of the engulfing pattern should cover the entire previous day body. Increase in the volume is expected.
Sell: when the price goes below the previous low and stop loss above the previous high. <span style=”line-height: 1.5;”>reward = risk taken</span
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