News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Dollar Index has broken major uptrend support and risks accelerated losses into the December open. Get your $USD technical analysis from @MBForex here:https://t.co/Txo8l8S1f1 https://t.co/YLVzP95JH8
  • The MACD is an indicator that uses exponential moving averages (EMA) to determine trend strength along with entry points based on crossovers. Find out how you can use the MACD as a buy/sell signal here: https://t.co/qxnP99uqTQ https://t.co/tGVqSZ2zK3
  • Support and resistance are the cornerstone of technical analysis, making it the foundation that you build your knowledge on. Build a stronger foundation here: https://t.co/yXLaRpl90I https://t.co/reMoYpqkQO
  • Struggling to define key levels? Floor-Trader Pivots assist traders in identifying areas in a chart where price is likely to approach and can be used to set appropriate targets, while effectively managing risk. Learn how to use this indicator here: https://t.co/Ye4m1FMKUW https://t.co/sqeRL7Rf7u
  • Cyclical and non-cyclical stocks can help diversify a trader’s equity portfolio. Get your guide to understanding these stocks here: https://t.co/h7BKTd2J8N https://t.co/ukOW0dWJxf
  • Beautifully put. https://t.co/0fBsmUH6Pb
  • Gold prices could claw back lost ground ahead of the non-farm payrolls report for November, buoyed by a dovish FOMC, falling real yields and rising inflation expectations. Get your $XAUUSD market update from @DanielGMoss here:https://t.co/3mqut0yQIQ https://t.co/nfyycibwKM
  • Recessions can devastate the economy and disrupt the fortunes of individuals, businesses, and investors. But economic decline in the business cycle is inevitable, and your trading can be defined by how you respond to crisis. learn how to prepare here: https://t.co/e4CnobJCss https://t.co/UWnLJHVPN4
  • Rather than focusing on earning a specific number of pips per day, traders need to focus on what can be controlled. In trading terms this relates to following a strategy perfectly, with no emotion or hesitation. Learn more here: https://t.co/6ZH026QLRN https://t.co/JJIyKh8r1l
  • That if you’re offended by what someone says on Twitter and that ruins your day, you live an extremely lucky life to be able to have that be your biggest problem for the day. https://t.co/H9KQjR3ViK
Understanding Engulfing Candles

Understanding Engulfing Candles

2011-02-24 03:18:00
Richard Krivo, Trading Instructor
Share:

Student's Question:Is the following a bearish engulfing pattern?How would you place your stop? Where would you enter? And your target? I need some examples...ThanksInstructor's Response:The candle that you have circled on the chart would not be an example of a bearish engulfing pattern. In order for a candle to be considered engulfing, it must completely "engulf", "swallow up" the candle preceding it. (This would also be true for a bullish engulfing candle.)The bearish (red) candle that was circled on your chart does not engulf the preceding candle.On the chart below you will find three examples of bearish engulfing candles and one example of a bullish engulfing candle.

Understanding_Engulfing_Candles_body_45961d1262737803-post-day-chart-1-05-10-b.png, Understanding Engulfing Candles

Regarding entry and stop placement, if this were a bearish engulfing pattern, the trade would be entered at the open of the candle immediately after the bearish engulfing candle. The stop would be placed as indicated by the red line labeled Stop on the chart below. The limit would be placed at twice the distance of the stop from the entry. For example, if the stop were 100 pips above the entry, our limit would be at 200 pips below our entry. This would ensure that we have a 1:2 Risk Reward Ratio in place on the trade.

Keep in mind that when using candles and their patterns in your trading, the greatest likelihood of success will be when a candle and/or pattern signals taking a trade in the direction of the Daily trend.

To learn more about the use of Candlesticks in your trading, if you have a live account when you have the live Trading Station open, click the Research button at the top. That will take you into Daily FX+. Then click Trading Course and then scroll down through the 15 subjects until you see Candlesticks. Click on it and you will see four lessons dedicated to the interpretation and usage of Candlesticks.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES