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RoboForex - www.roboforex.com
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[QUOTE="Vlad RF, post: 197459, member: 61796"] [B][SIZE=5]How to Trade the Engulfing Pattern?[/SIZE][/B] [I]Author: Dmitriy Gurkovskiy[/I] [CENTER][IMG]https://roboforex.com/uploads/img/news/main/roboforex-header.jpg[/IMG] [B]Dear Clients and Partners,[/B][/CENTER] This overview is devoted to the Engulfing pattern; to how it forms and works. This candlestick pattern is easy to note on the chart. It forecasts a reversal of the actual trend. [SIZE=5]How does the Engulfing pattern form?[/SIZE] The Engulfing pattern is a reversal candlestick pattern that forms on the local highs and lows of the price chart in an uptrend or downtrend. It consists of two candlesticks: the first one has a relatively small body, while the second one is of the opposite color and has a larger body that fully covers (engulfs) the first candlestick. In terms of the market behavior, an Engulfing pattern means that the actual trend is losing its power and tempo — the first candlestick demonstrates this. The previous movement loses strength, and the market balance is feeble. The appearance of the next mighty candlestick of the pattern that engulfs the previous one and closes in the opposite direction, signifies the beginning of a correction that might even turn into a reversal of the current trend. [SIZE=5]Types of the Engulfing pattern[/SIZE] Depending on the color of the second engulfing candlestick, two types of the pattern are sungled out: the Bullish engulfing and the Bearish engulfing. [B]Bullish engulfing[/B] The pattern forms in a downtrend at the local lows of the price chart. The first small black candlestick of the pattern shows that bears are losing power; then a large white candlestick appears, fully engulfing the body of the first one. This means that bulls are advancing, feeling the bears' weakness. Next thing, the price goes upwards, and an ascending correction starts. This is confirmed by the quotations rising higher than the high of the large bullish candlestick, the second one. [B]Bearish engulfing[/B] The pattern forms in an ascending impulse at the local highs of the price chart. The first small white candlestick means that bulls are tired and need a pause. The large black candlestick that follows shows that bears are using their chance, counterattacking. Then the quotations go down, and a descending correction starts. This is confirmed by falling under the low of the second candlestick, the large and white one. [IMG]https://blog.roboforex.com/wp-content/uploads/2021/07/Engulfing-en.jpg[/IMG] [SIZE=5]Closing thoughts[/SIZE] Reversal candlestick patterns called Bullish engulfing and Bearish engulfing form at the local extremes of the price chart in an uptrend or downtrend. They predict a possible correction or even a reversal. The efficacy of the patterns increase in presence of certain enforcing factors and alongside tech analysis patterns, support/resistance levels, and signals of trading indicators. Before trading for real, practise the patterns on a demo account. [URL=https://blog.roboforex.com/blog/2021/07/08/how-to-trade-the-engulfing-pattern/?utm_source=earnforex.com&utm_medium=cpc&utm_campaign=rf_en_external_forums_blog&utm_content=text]Read more at R Blog - RoboForex[/URL] [B]Sincerely, RoboForex team[/B] [/QUOTE]
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