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Well, today in this article. I am going to talk about one of the powerful candlestick patterns i.e Bullish engulfing candlestick pattern.
What is Bullish Engulfing?
Bullish Engulfing pattern is one of the most popular candlestick patterns used by traders to make buy calls.
The bullish engulfing is the first bullish candle that appears after a big downtrend.
If we see a big downtrend and the first candle is bearish and the second candle is a bullish candle then we can say that it is a bullish engulfing pattern.
However, The second candle must be a strong bullish candle filled with at least 75% body.
How to find Bullish Engulfing Pattern?
Here, To illustrate the Bullish Engulfing pattern I am going to use Olymp Trade.
If you don’t have an Olymp Trade account. Click here.
You can also sign up via the form below.
You can sign up here try…
Once you click the link above you will land on the Olymp Trade homepage.
Now, click on the register and enter your email, password & click sign up.
Once you have signed up you will land on the Olymp Trade homepage.
Now, click on the chart button and select Japanese Candlestick from the menu.
That’s it!!! The basic setup is over and your dashboard will look like something given below.
Now, talking about How to find Bullish Engulfing Pattern? well, it’s damn very easy.
Step 1: What you need to do is find a long downtrend.
Step 2: Secondly, Find a bearish candle ( red candle) with a green or bullish candle.
Step 3: Remember The second candle or green candle must be engulfing or covering the red candle with at least 75% body.
Step 4. Last but not least is to use support and resistance to confirm your BUY trade.
As you can see above. we have found the bullish engulfing pattern but due to market fluctuations, the next candle has broken the support level.
Therefore, to avoid such type of error we should support and resistance.
How do you trade Bullish Engulfing candlesticks?
By now I have told you How to find Bullish Engulfing Pattern? now, How to trade with Bullish Engulfing Pattern? let’s see some examples:
See the chart above as we can see a downtrend plus the first candle is bearish and the second candle is bullish, However, the bullish candle is not very strong so, we shouldn’t make any trade.
Similarly, here we can see a big downtrend plus a bullish engulfing However, the body isn’t strong and that’s not a perfect bullish engulfing pattern so we shouldn’t make any trade here.
See, the chart above well, this is the perfect bullish engulfing pattern as we can see a downtrend and then a bullish engulfing pattern and then a huge bounce up in the market. and we can place a BUY trade here.
(Note: I have confirmed the above chart with support and resistance earlier.)
So, this is the end of this article.
I hope you have found this article helpful.
Memorizing the main points:
What we need to do is firstly, find a downtrend.
Secondly, find a bearish candle and later a bullish candle. The second candle must have at least 75% body. that’s it!!
I wish a great success thank you. Best of luck. :-). If you still have any doubt or have found any error in this article feel free to contact me at Honestdigitalreview@gmail.com