1. Engulfing candles can provide an indication of potential trend reversals, trend continuations and entry and exit signals.
2. A bullish engulfing candle may open at or lower than the previous bearish candle’s closing price.
– A bullish engulfing candle closes higher than the previous bearish candle’s open price.
– The body of the bullish engulfing candle “engulfs” the previous bearish candle.
3. A bearish engulfing candle may open at or higher than the previous bullish candle’s closing price.
– A bearish engulfing candle closes lower than the previous bullish candle’s open price.
– The body of the bearish engulfing candle “engulfs” the previous bullish candle.
4. Engulfing candlestick patterns can be very accurate in providing indications. however, they are not 100% reliable.
5. Therefore, when using engulfing candlestick patterns in a strategy, it’s important to add some more confluence rules to increase your success rate.