Strategy with engulfing candlestick patterns - iq option
In this article I will discuss how to analyze the candlestick pattern in iq option. The following is an explanation:
Engulfing patterns are formed from 2 candlestick formations, in which the last candlestick "swallows" the previous candlestick with a longer form of candlestick body.
Or simply means the second candlestick is longer than the previous candlestick, with both candlesticks different colors (bullish / bearish).
The engulfing pattern will be more accurate if the second / last candlestick has a short or no tail.
This is because the long tail shape indicates unclear direction of price movements or consolidation tends to occur.
Shape a Candlestick Engulfing Pattern
There are 2 types of Engulfing patterns, namely
• Bullish Engulfing pattern
• Bearish Engulfing pattern
In a market movement that is trending the engulfing pattern indicates a reversal.
This can be used by traders to take an open trading position. Then how do strategies for reading engulfing candlestick patterns?
Previously, make sure you know the various forms of formation from this engulfing pattern. The engulfing pattern consists of two different color candlesticks.
In this article the colors of the bullish and bearish candlesticks are shown in the figure below:
1. Bullish Engulfing Pattern
A bullish engulfing pattern is used for the entry signal to take an open CALL / BUY position. In order for the results of the signal shown to be more accurate, make sure the market movements are in a trending state, not consolidation or sideways.
As in the picture above, the bullish engulfing pattern is created from two candlesticks 1 and 2.
Some conditions for the bullish engulfing pattern are:
• Occurs in trending movements
• The first candlestick (number 1) must be a bearish candlestick or doji candlestick.
• The next candlestick (no. 2) must be a bullishcandlestick and must have a longer body than the first candlestick body.
• Candlestick number 2 should have a short or no tail
• Open an up position which is CALL / BUY after the second candlestick is formed.
Examples of trading with a bullish engulfing candlestick pattern
2. Bearish Engulfing Pattern
The bearish engulfing pattern is used for the PUT / SELL open entry signal. This pattern must occur in the current market movement or trending is not sideways or consolidated.
• Occurs in trending movements
• The first candlestick (number 1) must be a bullish candlestick or doji candlestick.
• The next candlestick (no. 2) must be a bearish candlestick and must have a longer body than the first candlestick body.
• Candlestick number 2 should have a short or no tail
• Open an up position, PUT / SELL after the second candlestick is formed.
Example of trading using bearish engulfing candlestick pattern
If you want a more accurate signal, you can combine the above candlestick pattern analysis with the CCI indicator.
It's easy to recognize from the appearance of this engulfing candlestick pattern, even for beginners though.
That's the right strategy and trick technique in carrying out technical analysis of price movements. Hopefully it is useful for you to achieve profit consistently.
For example trading with engulfing candlestick strategies you can see in the video below.
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