What is the Bullish Engulfing Candlestick Pattern?
The Bullish Engulfing Candlestick Pattern is one of the most popular candlestick patterns used by traders to find a possible bullish trend. This candlestick pattern is the first bullish candle that appears after a significant downtrend. If we see a big downtrend and later a small bearish candle following a big bullish candle that completely engulfs or covers that small bearish candle appears it is considered a Bullish Engulfing Candlestick Pattern.
Firstly, You need to find a medium-sized red candle that has appeared after a big downward movement in the price. Secondly, A big bullish candle follows the red candle that completely engulfs or covers the small candle. It opens lower than the previous candle’s close and closes higher than the previous candle’s open. The Bullish Engulfing Candlestick Pattern displays the shift in the market sentiment. It suggests that the buyer has suddenly become optimistic and they are ready to dominate again.
Key Takeaways
- The Bullish Engulfing Pattern is a trend reversal pattern that appears after a big downtrend.
- The Pattern appears after a small red candle followed by a big green candle that completely engulfs the same.
- The appearance of the candlestick pattern suggests a change in sentiment and signals a strong upcoming bullish trend.
How to spot Bullish Engulfing Pattern on Olymp Trade?
In order to spot Bullish Engulfing you need to first login to your Olymp Trade account and set the default chart to candlestick. Next, click on the chart button and select Japanese Candlestick from the menu.
Now, talking about How to spot a Bullish Engulfing pattern on Olymp Trade?
Step 1: Firstly, you need to find a big downtrend as the Bullish Engulfing pattern works best after a strong downtrend.
Step 2: Secondly, find a medium-sized bearish candle that has appeared after a big downtrend. and Lastly, find a green candle that follows the red candle and opens above the same.
How do you trade with Bullish Engulfing Pattern?
As, I said above Bullish Engulfing Pattern is a very powerful pattern. The appearance of this pattern signals a shift in the momentum of the market from bearish to bullish. So, when you see a Bullish Engulfing pattern after a big downtrend you should go for a buy trade.
Given above, is the 1-hour chart of the Asia Composite Index, and we can clearly see a good downtrend and later a small bearish body completely engulfed by a big green body. So, It is a Bullish Engulfing Pattern and here we can place a buy trade.
Bullish Engulfing Pattern Reliability: How reliable this candlestick pattern is?
Bullish Engulfing Pattern is highly reliable. However, If you want to reap the real results with this pattern then you should combine the pattern with other trend indicators. For Instance, let’s combine it with support and resistance to confirm our call.
In case You don’t know
Support and Resistance is the preassumed price level that acts as a barrier to the price. It is preassumed that the price will oscillate around these two levels. Support is the price level that acts as a barrier for the buyer and stops the price from going down any further. when the price touches the support level the price will most probably bounce back up in the support of buyers. vice versa, Resistance is the price level that acts as the ceiling for the sellers and stops the price from going up any further. when the price touches the resistance level the price will most probably bounce back down in the support of sellers.
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