In this lesson, you will learn what a bullish engulfing pattern is and how you can trade it for huge profits. Wrapping Things Up Bullish engulfing patterns can be a great way to identify potential reversals in the market. Lets see how an ideal entry and stop loss position for bullish and bearish engulfing patterns would look like on a real chart: Notice that the entry point marked on the chart above would have safeguarded the trader from the immediate pullback into the bullish.
Prague forex and derivatives s.r.o
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Note that the close of our bar is higher than the open, giving it the bullish characteristics. Your Turn Are you currently trading bullish engulfing patterns? Notice that we entered on a retest of the key level that was broken, which now becomes support. The chart above illustrates the first two requirements of the pattern. Figure 2 : Bullish and Bearish Engulfing Patterns. Many traders believe that this method of entry only works with pin bars. So when you combine the pattern with a broken resistance level, the conviction becomes that much stronger. Notice how the body of the engulfing candle doesnt cover the previous one. The way I like the trade it is a bit different from what you are probably used to seeing. In my experience, the most probable patterns are the ones where the body of the engulfing bar engulfs the previous candle. And wellwhat it yields should be of little surprise.