Engulfing Candlestick Pattern : ENGULFING PATTERN is often considered a "reversal pattern", but it is not always so, this model can be considered a simple pause of the major trend.
An engulfing pattern is an excellent trading opportunity because it can be easily spotted and the price action indicates a strong and immediate change in direction. In a downtrend, an up candle real body will completely engulf the prior down candle real body (bullish engulfing). In an uptrend a down candle real body will completely engulf the prior up candle real body (bearish engulfing).
- A high probability price action approach for trading bullish and bearish Engulfing patterns is to look for the pattern to appear at important support and resistance levels.
- The best place for a stop loss order in an Engulfing trade is beyond the Engulfing pattern extreme. This would mean that if the Engulfing setup is bullish, the Stop Loss order should be placed under the lower candlewick of the engulfing candle. If the Engulfing setup is bearish, then the Stop Loss order should be located above the upper candlewick of the engulfing candle.
What is the first TARGET :
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