Trading in ingulfing pattern

An engulfing pattern occurs when a candlestick with a large body literally engulfs the body of the preceding candlestick. Ideally the engulfing candlestick will be a different colour to the preceding one, signalling a change in trend. A Bullish engulfing will signal the reversal of a down trend and follow a negative candlestick. A Bearish engulfing is simply the opposite of this. It should follow to another indicator  MACD

The theory behind the formation is that after a trend in one direction, the second large candlestick begins to form when residual pressure causes the security to open above or below the previous open/close. Can Follow DAILY CHART However, the new market direction is revealed as buyers/ sellers step in after this opening gap and begin to drive prices up/ down. Towards the end of the period, this change in direction is so intense that prices move to engulf the previous open/close as well. Good volume is an indication of the strength of the push the engulfing pattern will give to a new trend. The pattern is also strongest when the engulfing occurs after a marked trend in one direction. In the example above note the ‘V’ that is formed by the immediate reversal of the previous trend. Finally ensure you wait until the candle has closed before identifying it as an engulfing pattern. Next Important Indicator Is HAMER CANDLE

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