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Engulf Pattern Checklist

The document outlines the rules and probability enhancers for trading using the Engulf Pattern for both long and short positions. For long positions, a red candle followed by a green candle must completely engulf the previous candle's body, while for short positions, a green candle followed by a red candle must do the same. Additional conditions include the placement of stop-loss orders and ensuring a minimum risk-reward ratio of 2:1, with emphasis on avoiding sideways structures.

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8 views4 pages

Engulf Pattern Checklist

The document outlines the rules and probability enhancers for trading using the Engulf Pattern for both long and short positions. For long positions, a red candle followed by a green candle must completely engulf the previous candle's body, while for short positions, a green candle followed by a red candle must do the same. Additional conditions include the placement of stop-loss orders and ensuring a minimum risk-reward ratio of 2:1, with emphasis on avoiding sideways structures.

Uploaded by

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

ENGULF PATTERN

Rules for Long Positions:


● A Red Leg candle should form, the Next candle should be Green
and completely Engulf the Body of the previous Candle (or at
least 70% Body of the previous Candle)
● Both the candles should be Leg Candles
● Both the candles should not have too much wicks
● Green candle should not have upper wick more than 20% of the
range of the candle
● Green candle should Engulf Red candle completely (or at least
70%) [This comparison is Body to Body of both the candles]
● Engulf Pattern Should form Inside the HTF DZ
● Engulf Pattern should form at the Extreme of Pivot
● If price cross Lowest of the Engulfing Candle (Green Candle) and
the Previous Candle (Red Candle) before crossing the Close of
the Engulfing Candle then we have to Reject that Trade
● Entry will be just Above the Close of the Engulfing Candle
● Stop-Loss will be Below the Lowest of the Engulfing Candle
(Green Candle) or the Previous Candle (Red Candle)
● We should get a minimum RR of 2:1 till HTF SZ
(Best/Average/Low Quality DZ)
● Plan deeper entry if we are not getting a minimum RR of 2:1 till
HTF SZ
Probability Enhancers for Long Position:
● Engulf Pattern should not form in Sideways structure
● The nearer an Engulf Pattern is to the Distal line of HTF DZ, the
better it is.
● If Stop-Loss is near Distal of HTF DZ then place Stop-Loss beyond
HTF DZ
Rules for Short Positions:
● A Green Leg candle should form, the Next candle should be Red
and completely Engulf the Body of the previous Candle (or at
least 70% Body of the previous Candle)
● Both the candles should be Leg Candles
● Both the candles should not have too much wicks
● Red candle should not have a lower wick of more than 20% of
the range of the candle
● Red candle should Engulf Green candle completely (or at least
70%) [This comparison is Body to Body of both the candles]
● Engulfing Pattern Should form Inside the HTF SZ
● Engulf Pattern should form at the Extreme of Pivot
● If the price crosses the Highest of the Engulfing Candle (Red
Candle) or the Previous Candle (Green Candle) before crossing
the Close of the Engulfing Candle then we have to Reject that
Trade
● Entry will be just below the Close of the Engulfing Candle
● Stop-Loss will be Above the Highest of the Engulfing Candle (Red
Candle) or the Previous Candle (Green Candle)
● We should get a minimum RR of 2:1 till HTF SZ
(Best/Average/Low Quality DZ)
● Plan deeper entry if we are not getting a minimum RR of 2:1 till
HTF DZ
Probability Enhancers for Short Position:
● Engulf Pattern should not form in Sideways structure
● The nearer an Engulf Pattern is to the Distal line of HTF SZ, the
better it is.
● If Stop-Loss is near Distal of HTF SZ then place Stop-Loss beyond
HTF SZ

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