Bullish Engulfing Pattern

Question 1

What is a Bullish Engulfing candle?

Answer 1

The Bullish Engulfing pattern involves two candles, with the second candle completely engulfing the body of the previous red candle.

Question 2

Where does the bullish engulfing candle appear?

Answer 2

The bullish engulfing candle appears at the bottom of a downtrend, indicating a surge in buying pressure.

Question 3

What are the characteristics of a bullish engulfing pattern?

Answer 3

Characteristics of a bullish engulfing pattern:

• Strong green candle that ‘engulfs’ the prior red candle body (disregard the wicks).
• Occurs at the bottom of a downward trend.
• Stronger signals are provided when the red candle is a doji, or when subsequent candles close above the high of the bullish candle.

Question 4

How to trade a bullish engulfing pattern?

Answer 4

• Entry: After the engulfing candle closes.
• Stop loss: Below the recent swing low.
  Target: At the recent swing high.