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Trading Notes

The document explains the engulfing bar pattern, a reversal candlestick pattern characterized by two opposite colored bodies, where the second body engulfs the first. A bullish engulfing pattern signals a potential reversal at the end of a downtrend, while a bearish engulfing pattern indicates a reversal at the end of an uptrend. Steve Nison outlines three criteria for identifying this pattern, including the presence of a clear trend and the engulfing nature of the candlesticks.

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11 views1 page

Trading Notes

The document explains the engulfing bar pattern, a reversal candlestick pattern characterized by two opposite colored bodies, where the second body engulfs the first. A bullish engulfing pattern signals a potential reversal at the end of a downtrend, while a bearish engulfing pattern indicates a reversal at the end of an uptrend. Steve Nison outlines three criteria for identifying this pattern, including the presence of a clear trend and the engulfing nature of the candlesticks.

Uploaded by

onyiisgold
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Trading notes.

What is an engulfing bar pattern?


This reversal candlestick pattern consists of two opposite colored
bodies in which the second body engulfs or covers entirely the first

A bullish engulfing pattern forms at the end of a downtrend, it


provides a clear signal that the buying pressure has overwhelmed the
selling pressure.

A bearish engulfing pattern occurs at the end of an uptrend, it is a top


trend reversal indicator, it shows that the bulls are no more in control
of the market, and the price trend is likely to reverse.

According to Steve Nison, the father of modern candlestick charting,


this candle must meet three important criteria to be considered as a
reversal pattern:
1-The market is in a clearly definable uptrend or downtrend
2-The engulfing candle comprises of two candlesticks, and the first
body is entirely engulfed by the second one.
3- The second real body is the opposite of the first real body.

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