Hey traders,
In this educational post, I want to discuss with you one of the most accurate REVERSAL candlestick patterns - the engulfing candle.
On ETHUSD chart, I spotted for you bullish & bearish examples of this pattern.
The logic behind this pattern is quite simple:
โญ๏ธIn a bullish trend, after a strong directional movement, the price reaches some important structure level. Growing steadily and forming a sequence of green bullish candles the price suddenly forms a strong bearish candle.
What is particular about that candle is the fact that its total range (distance from the wick high to wick low) & body range (distance from body open to body close) exceed the ranges of a previous bullish candle.
๐ปSuch a candle we will call a bearish engulfing candle.
Most of the time it signifies a strong spike in selling volumes and willingness of sellers to push.
With a high probability, such a formation leads to a pullback or even a trend reversal.
In this educational post, I want to discuss with you one of the most accurate REVERSAL candlestick patterns - the engulfing candle.
On ETHUSD chart, I spotted for you bullish & bearish examples of this pattern.
The logic behind this pattern is quite simple:
โญ๏ธIn a bullish trend, after a strong directional movement, the price reaches some important structure level. Growing steadily and forming a sequence of green bullish candles the price suddenly forms a strong bearish candle.
What is particular about that candle is the fact that its total range (distance from the wick high to wick low) & body range (distance from body open to body close) exceed the ranges of a previous bullish candle.
๐ปSuch a candle we will call a bearish engulfing candle.
Most of the time it signifies a strong spike in selling volumes and willingness of sellers to push.
With a high probability, such a formation leads to a pullback or even a trend reversal.