differences between a professional traders entry and a retail entry should be very clear by now. If the open point is below the close point, this notes an upward trend, often shown in white or blue when charted. The only reason it is so widely spread throughout the retail market is because it makes trading easy, plus the confirmation part caters to the lack of trust beginning traders have in the markets and their own trading. During a downtrend, only take short positions. The black horizontal line on the image is the very strong psychological resistance of the Swissy at the parity rate.0000 Swiss Franc for 1 Dollar. This means that the minimum you should pursue from an Engulfing pattern should equal the distance between the tips of the upper and the lower candlewick of the engulfing candle. Especially with all the other content weve posted before.
Giving you a worse entry. In this example price never retraced back into the bar and continued to sell off. An engulfing candle strategy signal doesn't mean the trend will always resume, that is why a stop loss is mandatory. It starts with a bullish candle and then a bigger bearish candle, whose body fully engulfs the first candle of the pattern. Most retail traders come to the markets with unrealistic expectations and are therefore extra vulnerable to the quick fix trading approach these patterns offer. The pullback should not rally above the high of the prior pullback, as this violates the rules of a downtrend. A guess would be not so good. B) It gives the trader a false sense of confirmation. Engulfing Pattern and Price Action Strategy Now lets take our understanding of the Engulfing pattern and illustrate a price action based trading strategy.