Bullish And Bearish Engulfing Candlestick Patterns Means Trend Reversal

Bullish And Bearish Engulfing Candlestick Patterns Means Trend Reversal

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Many traders make a good living catching changes in the trend. Catching a trend change means trying to pick the top or bottom of a trending move. It is not easy. But it can be highly rewarding if done correctly. Bullish and bearish Engulfing Candlestick Pattern is one of the most popular patterns used by traders to anticipate a trend reversal.

This is a two stick pattern and it takes two days for the pattern to develop. The pattern's name comes from the fact that the signal day completely engulfs the setup day. So the candle body and the wick on the signal day engulfs the candle body and wick on the setup day.

In case of a Bullish Engulfing Pattern, the first day candle is bearish meaning the bears were in control. But on the second day, bulls enter the market roaring pushing the prices higher and higher giving you a large bullish candle that engulfs the first day candle completely. Similarly, in case of a Bearish Engulfing Pattern, the first day is bullish but the second day bears set in motion heavy selling giving a large bearish candle that engulfs the first day bullish candle

The bigger the second day candle, the more powerful the trend reversal signal. If it is a very big bullish candle, it means bulls are in total control and if it is a big bearish candle, it means the bears are now in full control.

When you combine the engulfing candlestick pattern with a indicator like the CCI, you can get very quick and powerful trend reversal warning.

Bulls and bears constantly battle for the control of the market. When a bullish engulfing pattern is formed, it means bulls are in total control of the market. Similarly when a bearish engulfing pattern is formed, it means bears are now controlling the market.

When it is a bullish engulfing pattern, it means the bulls are going to control the market for the coming days. Similarly when it is a bearish engulfing pattern, it means the bears will control the market for the days to come.


About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. Master these highly profitable Candlestick Patterns with this FREE 82 page PDF Candlestick Guide. Get these 3 Swing Trading Systems FREE!



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