Learn Forex: Trade the Bullish Engulfing Pattern | DailyFX: "
What is a bullish engulfing pattern?
A bullish engulfing pattern is a candlestick pattern normally found at the end of a period ofdownward market pressure. Pictured above we can see the pattern itself which iscomprised of two completed candles. The first candle will depict the end of the currency pairs established weakness. The size of this primary candle can vary from chart to chart and is not directly pertinent to the engulfing pattern. 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 most important, which signals a return to a bullish market bias. This candle is expected to stick out from price action as a long blue candle creating newupward price momentum. To be considered a complete bullish engulfing candle, the high of this blue candle should close well above the high of the previous candle. The higher this secondary candle rises, the stronger our signal is considered. A new push of upward movement in this position on the chart, reflects new buyersovertaking the previous strength of the sellers.This actioncan be used in conjuncture with an established uptrend,with buyers looking to enter the market on new strength.
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