Bullish Engulfing Pattern – This pattern is made up of two candles, in which the first candle is red and the second candle is green, and the real body of the first candle should be inside the real body of the second candle.
In this article, we will learn what is Bullish Engulfing Pattern, how to identify it on the chart during trading and how should we trade in it, and what are the things we need to keep the most in mind during trading, and how and where should we place the target and stoploss.
Bullish Engulfing pattern
There are many types of candlestick patterns in technical analysis, one of which is the bullish engulfing pattern.
This pattern is made up of two candles, the first candle is red and the second candle is green.
The formation of both the candles makes it look as if the first candle (bullish candle) has been completely engulfed by the second candle (bearish candle).
And this is why it is called bullish engulfing pattern.
The real body of the bullish engulfing candle looks different depending on the wick size and position. As you can see in the image given below.
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How to find bullish Engulfing pattern
To find the bullish engulfing pattern, you can see the picture given below. All the things mentioned below should be followed properly.
1. The first candle should be red.
2. The second candle should be green.
3. The real body of the second candle should completely engulf the real body of the first candle.
This is a trend reversal pattern which indicates the end of recession and the beginning of an uptrend in the market.
For this candlestick pattern to be formed, the previous few candles must be in a downtrend, only then this formation will be considered correct. If you see this pattern at the top of a sideways market or an uptrend, then it has no significance.
Bullish engulfing pattern Important Tips
- You should never trade by taking tips from anyone, first you have to learn by yourself and then trade.
- No candlestick chart pattern works 100% in the market, hence you should enter the trade only after confirming your trade from multiple levels in the market.
Stoploss and target
Target – Although the target in this type of trade depends on the situation, you can exit your trade from wherever you see the next resistance area or reversal signal.
Stoploss – In this trade, you can place a stoploss on the candle which has the lowest low among the two candles of the bullish engulfing candlestick.
If you want to set the target in advance then the safest thing for you would be to keep a target of 1:1. If your stoploss is 10 points then keep a target of 10 points only.
How to trade the Bullish Engulfing Pattern?
A stock which has been continuously trading down for some time, and now a bullish engulfing candle is formed in it.
Now you do not have to take the trade in a hurry as soon as the candlestick is formed, first there are some points below, after looking at which you will get the correct confirmation of your trade and only after that you will make the entry.
- In this you have to see whether the market is in a downtrend before the formation of this candle or not.
- The low of the first red candle of this pattern should be below the low of its previous three candles, the difference between the open and closing of the second candle of this pattern i.e. the green candle should be at least 3%.
- In this pattern, the high of the second candle should be above the high of the first candle.
- The volume of the second candle should be more than the volume of the first candle.
- And lastly you have to see whether the candle that has been formed is in a support area.
If you have confirmed your trade keeping all these points in mind, then now your entry should be around the closing of this pattern, that is, after the closing of the last candle of bullish engulfing, you can create your position in this trade.
In this candlestick you do not need confirmation of the next candle because we have already confirmed our trade by looking at the points with high accuracy.
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Bullish Engulfing candlestick pattern Conclusion
Today through this article we have tried to give you detailed information about the Indian Bullish Engulfing pattern. If you liked this article written by us, please tell us by commenting and if you have any question in your mind about this what is Bullish Engulfing pattern.
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