Engulfing Candle Stick Pattern

Engulfing means one object “fully covered” by other object. Engulfing candle stick pattern is made of two candle sticks. One of them is fully covered by other.

Bullish Engulfing

The bullish engulfing pattern is formed of two candlesticks. The first candle is a short red body that is completely engulfed by a larger green candle. Though the second day opens lower than the first, the bullish market pushes the price up, culminating in an obvious win for buyers.

Every time candle stick patterns doesn’t work as expected. do you know why ? because there is a concept known as “area of interest”. This concept explains where the patterns appears. If a candle stick pattern appears on support/resistance it will work. Like this you have to find your area of confluence so that when you trade outcome should be profitable.

Bullish Engulfing in CANARA Bank chart

Entry and Stop Loss

Entry should trigger once high of the big bullish engulfing candle breaks. Stop loss will be low of engulfing candle.

Entry and Stop loss

Bearish Engulfing

A bearish engulfing pattern occurs at the end of an uptrend. The first candle has a small green body that is engulfed by a subsequent long red candle. It signifies a peak or slowdown of price movement, and is a sign of an impending market downturn. The lower the second candle goes, the more significant the trend is likely to be.

Bearish Engulfing in CANARA Bank chart

Entry and Stop Loss

Entry should trigger once low of the big bearish engulfing candle breaks. Stop loss will be high of engulfing candle.

Entry and Stop Loss

Remember this: Once a trade is initiated, you should hold on to it until either the target is hit or the stop loss is breached.

Hope you have learned some more candlestick patterns from this blog. if you have any questions do write in comment. I would be glad to answer them. See you soon…

Sandeep Yadav

Sandeep Yadav is an Author, Founder & CEO at STOCK VENTURE who started his career early at the age of 20. He worked as IT Professional in reputed MNCs like Microsoft Corp, PeopleTech Group etc & parallelly started his hand in stock market as well, made it a success, became a Trader, Trainer and Author.

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