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Engulfing is a reversal pattern. The volume should be high.
Buy when the green body covers the previous red body
sell when the previous red body covers the green body
when one body completely covers the second body then engulfing accurs. The volume also should me more on that day
when the green body covers the previous red body go for buying it should happen after the bearish trend
when the red body covers the previous green body then go for selling it should happen after a bullish trend
Engulfing pattern are reversal candlestick pattern
Bullish engulfing pattern
market is in downtrend
-small black candlestick is followed by a large white candlestick that completely engulfs ( body and tail ) the previous day candlestick
a slight increase in trading volume is expected during any of the last two trading days
enter long position or exit short position above the high of second days white candle
Bearish engulfing pattern
market is in uptrend
-small white candlestick is followed by a large black candlestick that completely engulfs ( body and tail ) the previous day candlestick
a slight increase in trading volume is expected during any of the last two trading days
enter short position or exit long position below the low of second days black candle
Its a reverse trend after a recent price fall if the bullish candle body was able to cover previous day bearish candle body with the open at lower levels then it indicates a bullish engulfing pattern.
volume may not be necessary and it appears frequently.
Buying conditions:
Buy when it crosses the last two days maximum with stop loss of engulfing pattern’s low
Sell when there is a bearish engulfing pattern with last two days minimum and the stop loss should be engulfing pattern’s high.
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