A Bullish Engulfing signal

 This completely engulfs of the previous

day's candle body and represents overwhelming buying pressure overcoming

the selling pressure.

A Bullish Engulfing signal is one of the major signals. Like the Doji, if it occurs

at or near a major level of previous support it indicates that a high probability

trade is setting up. However unlike the Doji you can enter at the open of the

next candle.

Description

The Engulfing pattern is a major reversal pattern comprised of two opposite

colored bodies. The Bullish Engulfing Pattern formed after a downtrend. It

opens lower that the previous day’s close and closes higher than the previous

day’s open. Thus, the green candle completely engulfs the previous day’s red

candle.

Criteria

 The body of the second day completely engulfs the body of the first day.

Wicks are not a consideration

 

 There is a definable down trend, even if it has been short term.

 Prices are at a major level of resistance.

Additional Pattern Enhancements

 A large body engulfing a small body.

A large body engulfing a small body.

 

 If the engulfing body engulfs several previous candles.

 If the engulfing body engulfs the body and the wicks of the previous day

 If the pattern forms after a Doji

 

In the pictures Bullish Engulfing Pattern forex system in action.

Here we had a Doji/Pin bar candle on May 25 followed by a bullish engulfing

candle. The trade was entered the next day at 1.41396. The stop was placed

a few pips under the Doji/Pin bar wick at 1.39868 for 150 pips. Take profit

was placed at the weekly resistance at 1.4634 for 490 pips. Profit target was

hit on June 3.