Bullish Bearish Engulfing Pattern | Intraday Strategy 1

Bullish Bearish Engulfing Pattern

Bullish & Bearish Engulfing candles helps the traders in spotting the trend reversals in Intraday market, and also assist traders with an entry & exit signal. The Bullish Bearish Engulfing Pattern candlestick involve two candles with the latter candle ‘engulfing’ the entire body of the prior candle. A candle for a particular time period is built using four prices: Open, High, Low and Close. If Close is higher than Open, it is a bullish candle (green). If Close is lower than the Open, the candle is bearish (red).The price area between Open and Close is known as body. the wicks are known as shadows. 

Know as you have understood basics of a candle ; lets proceed with Bearish Bullish Engulfing Pattern.

Bullish Engulfing

When a candle with a large green body engulfs the previous red body candle, it is called Bullish Engulfing .

Bearish Engulfing

When a large red body candle engulfs the previous green body candle, it is called Bearish Engulfing.

Now, we are ready for our Intraday strategy part 1

Bullish Bearish Engulfing Pattern | Intraday Strategy 1

Whenever you see a Bullish engulfing in a downtrend, it signals reversal of the downtrend, that means chances of price of that particular stock going up is higher.

One should remember the below points when trading with the Bullish Engulfing pattern:

• Prior trend: One should note that the prior trend is the downtrend
• Pattern: The second candlestick should be bullish and engulfing the body of the first candlestick.
• Stop loss: Stop loss can be placed below the low where the bullish engulfing pattern occurs.

You can enter ( BUY signal) the market at next following candle ( either red or green ) and exit ( SELL signal) making profit afterwards.

Similarly, whenever you see a Bearish engulfing in a uptrend, it signals reversal of the uptrend, that means chances of price of that particular stock going down is higher.

One should remember the below points when trading with the Bearish Engulfing pattern:

• Prior trend: One should note that the prior trend uptrend
• Pattern: The second candlestick should be bearish and engulfing the body of the first candlestick.
• Stop loss: Stop loss can be placed below at the high where the bearish engulfing pattern occurs.

You can enter ( SELL signal ) the market at next following candle ( either red or green ) and exit ( BUY signal ) making profit afterwards.

There is often a lot of confusion on whether the candle should engulf just the real body or the whole candle, including the lower and upper shadows. As long as the real bodies are engulfed you can safely classify the candle as a bullish or bearish engulfing pattern. Of course, some candlestick sticklers would object to this but what really matters is how well you hone your trading skills with a particular candlestick pattern with experience.

For more insights : Visit https://www.thinkmarkets.com/en/learn-to-trade/indicators-and-patterns/general-patterns/bullish-bearish-engulfing-candlestick-patterns/

Final Takeaways

The engulfing candlestick can be bullish or bearish based on where it forms in relation to the ongoing trend. The bullish engulfing candle signals reversal of a downtrend and indicates a rise in buying signal when it appears at the bottom of a downtrend. This pattern triggers a reversal of the ongoing trend as more buyers enter the market and move the prices up further. While, the bearish engulfing pattern is just the opposite of the bullish pattern. It signals a reversal of the uptrend and indicates a fall in prices by the sellers who exert the selling pressure when it appears at the top of an uptrend. However, before adopting this Bullish Bearish Engulfing Pattern Strategy, don’t forget to confirm the signals given by this pattern with other technical indicators such as RSI MACD etc. Entering & Exiting the Intraday market with this strategy along with other technical analysis will surely yields to inflated profits.

Read also : HOW TO SELECT STOCKS FOR INTRADAY ( https://thebrightdelights.com/how-to-select-stocks-for-intraday/ )

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