What is a Bullish Engulfing Pattern?
Bullish Engulfing Pattern is a Forex candlestick pattern consisting of two candlesticks. It is a reversal pattern (it changes the direction of the trend), it usually turns a downtrend into an uptrend or a weaker downtrend.
How does Bullish Engulfing Pattern look like?
This candlestick pattern contains two candlesticks, one bearish and the other is bullish. The first one has to be smaller the the second.
The longer the second candle is (the bullish one), the strongest is the signal it gives.
Where does a Bullish Engulfing Pattern appear?
It appears at the end of a downtrend. It either changes it to an uptrend or just decreases the price’s bearish bias.
What do I do when I see a Bullish Engulfing Pattern?
Bullish Engulfing Pattern is a bullish signal. It means that we expect the price to rise after it appears. So when you encounter a Bullish Engulfing Pattern, you should be looking for buying opportunities.
However, you have to be patient and wait for the formation of the second bullish candle to complete before taking action, since it might surprise you and change its shape and thus change its trading indication.
IF the two candlesticks are almost the same size, that could mean the market will start range trading, so you can’t depend on this pattern in your Forex trading decisions.
Best is to wait till both candlestick formations complete and even for one more candle after them that shows us more bullish sign. Plus, you have to use other Forex trading factors, Fibonacci, indicators, etc.