Trading the Bullish Engulfing Candle Pattern

Trading the Bullish Engulfing Candle Pattern explained by professional Forex trading experts the “Trading the Bullish Engulfing Candle Pattern” FX trading team.

Trading the Bullish Engulfing Candle Pattern?

Spotting price reversals and continuations through the interpretation of price action is an important skill for Forex traders to master. Candlestick analysis can help make this process easier. Candle pattern interpretation does not only make navigating the market easier, but it can also be a useful trading tool. With this idea in mind we will focus on recognizing and trading one of the markets most clear cut price action signals, the bullish engulfing candle pattern.
A bullish engulfing pattern is a candlestick pattern normally foundafter a period of downward market pressure. Pictured above we can see that the bullish engulfing candle pattern is actuallycomprised of two completed candles! The first candle will normally depict the end of the currency pairs established weakness. This first candle can come in a variety of shapes and sizes and will vary from chart to chart.While it is notdirectly related to the next engulfing pattern, this candle should denote the end of the markets current decline. Small candles such as dojis are considered preferable in this position though, as they can reflect market indecision in the current trend.

The second candle in the pattern is arguably the most important. As seen above, this candle is expected to stick out from price action and close as a long blue candle. This large move in price signals a return to a bullish market bias with newupward price momentum surging towards higher highs. To be considered a complete bullish engulfing candle pattern, the high of this blue candle should close well above the high of the previous candle. The higher this blue candle advances, the stronger our signal is considered. A new push of upward movement in this position on the chart, reflects new buyers overtaking the previous strength of the sellers.This action can be used in conjuncture with an established uptrend,with buyers looking to enter the market on refreshed strength.

Trading the Bullish Engulfing Candle Pattern Conclusion

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