Mastering Engulfing Candle Trading

8 lug 2023

https://www.tradingview.com/x/CEz2isr7/
📚Engulfing candles are an essential feature of technical analysis in forex trading. An engulfing pattern happens when a larger candle engulfs the entire body of the previous candle, signaling a potential reversal of the current trend. Engulfing candles, which can be either bullish or bearish, are trusted by many traders for their reliability in predicting future price movements. However, to become an expert in engulfing candle trading, one needs to learn how to identify the best ones and leverage their body size effectively. In this article, we will look at the crucial steps to master this trading strategy.

🔎Identifying the Best Engulfing Candles
One of the key aspects of trading using engulfing candles is knowing how to spot the strongest signals. The best engulfing candles should be resistant to the noise and inconsistent movements that can often occur in the forex market. The first step towards identifying the best engulfing candles is to focus on the size of the preceding candles. Candles with small bodies and long wicks produce too much noise and can lead to false signals. Instead, seek engulfing candles that develop after a significant price move, ideally with a larger body and shorter wick. Higher timeframe charts - like the 4-hour and daily - offer better accuracy in identifying reliable engulfing patterns.

💪Leveraging Body Size for More Efficient Trading
The size of an engulfing candle’s body plays a crucial role in determining the strength of a trend. A larger body indicates more significant price movement and more active participation from traders. The size of the engulfing candle can also help ascertain the potential strength of the new trend. Bigger body sizes usually signal a stronger trend, whereas smaller bodies usually represent a more moderate price move. Traders can leverage body size to adjust their trading strategy – for instance, employing wider stop losses for more significant movements or using tighter take profit targets for moderate trends.



I have collected couple of good engulfing candles that we were trading with our team.
Take a closer look at their body sizes and the previous candles.


Such candles alone can provide fantastics trading opportunities.

🔔Conclusion
Engulfing candles are an essential tool in forex trading, and their size can significantly help traders identify the best entry signals. Traders who master engulfing candle trading can develop a more accurate technical analysis strategy that yields high returns. By continually analyzing candlestick patterns and using other technical analysis tools, traders can build robust investment strategies that enable them to become profitable forex traders.

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