This article is all about one of the most powerful and reliable Forex price action set ups available. It is the bearish and bullish engulfing bar. Some traders call it the bearish or bullish outside bar. When played from the right areas and with the knowledge of how to be used correctly the engulfing bar is extremely useful price action tool to have in the trader’s armoury.
The acronyms for bearish and bullish engulfing bar are BEEB and BUEB.
Engulfing Bar structure:
The engulfing bar as it states in its title is formed when it fully consumes the previous candle. The engulfing bar can engulf more than 1 previous candle but to be considered an engulfing bar at least 1 candle must be fully consumed.
An example of a valid Bearish Engulfing Bar
An example of an Bullish Engulfing Bar
When looking for Engulfing bars we are looking for the large and very obvious bars that stick out. The bigger the Engulfing bar the better to trade as Engulfing bars are momentum bars, and we want to trade with momentum on our side! The bigger the bar, the bigger the momentum!
Not all Engulfing bars are tradeable signals and this is where the knowledge of where to look for them to form is absolutely key! The 2 basic criteria that need to be followed for an Engulfing bar to be a tradeable Engulfing bar are:
1: Must be large and obvious,
2: Must form at a swing point.
Those are just the 2 very basic things you need to look for when assessing an engulfing bar. When I say the Engulfing bar must form at a swing point, I mean if in an uptrend it must form at a swing low or if in a down trend it must form at a swing high.
Example of large and obvious Engulfing Bars
When combined on high time frames such as weekly and daily charts, and used with correct money management the Engulfing bar is a very reliable and profitable Forex tool that every trader should have in their arsenal.
Further information on how to correctly trade Engulfing bars, including where to enter, and stop placement as well as where the correct place to trade these signals from.
I hope this artical will help you or take the first step to become a full time professional trader.
Thanks,
pls feel free to leave your comments
