How Bullish engulfing pattern give big profit.
Engulfing pattern
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| Best candle for intraday trading |
Engulfing pattern is a combination of two types of candle, which is one candle is comparatively larger than another. One of the best candle patterns.
A green candle engulfs the previous day especially a red candle at the bottom, it is the bullish engulfing pattern.
On the other hand, if the red candle engulfs the green candle on top, it shows a bearish engulfing pattern.
This is backtested and the best candle pattern for intraday trading and gives tremendous profit. To increase accuracy trade after conformation.
Identification of Bullish Engulfing chart
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| A best Bullish engulfing pattern |
- The previous red candle is slightly smaller than the green candle.
- The prior trend should be a downtrend.
- The first day of the candle should be a red candle at the bottom that indicates a bearish condition of the market.
- The second day of the green candle is a bit bigger than the previous red candle.
Psychology of bullish engulfing chart.
Please observe the screenshot of SBI stock.
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| Big profit from the bullish engulfing pattern |
- Continuously 10 days, it formed a red candle and so the downtrend appear.
- As the day passes, the strong downtrend becomes weak and buyer and seller are confused.
- The first candle of the bullish engulfing pattern opens high and closes at a lower price. The second green candle opens at the close price of the first candle close price.
- The sudden increase in the price of green candles as the seller site decrease and the buyer side increase.
- Downtrend breaks by one big green candle and traders decide to only buy.
- Price continuously increases 7 days because traders confirm to go with the uptrend.
Trade set up for Bullish engulfing pattern.
Priority is to decide either buy or sell. We have learnt that the downtrend is broken by a single green candle so go with the buyer side. Traders always follow Trends.
The buying price is close to the previous day close price.
Stop-loss is the lowest price of the bullish engulfing pattern. The target price is 1.5 times a stop-loss price.
The stock market moves randomly so it's hard to predict the trade. Sometimes not away from any rule, so beginners should aware. Trade small quantities and avoid big losses.
Why it fails.
Because Red and green candles are the same size. But next red candle closed above the green candle.
The best candle pattern has a slightly big green candle than a red candle.
If this candle pattern fails to give extra profit. How are we profitable in this situation?
Avoid
d this stock and find a suitable stock.
Confirmation of pattern
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| Bullish engulfing pattern fail |
- The green candle is always greater than the previous red candle.
- Shadows of candles are smaller in size.
- The third candle is open either above the closed price or at the closed price of big green candles.
- The closed price of the third candle is above the bullish engulfing pattern.
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