Price action trading strategy.
Waht is engulfing candle
An engulfing candle is a type of price action pattern that occurs when the body of a candlestick completely "engulfs" the body of the previous candlestick. This can be a bullish engulfing pattern, which occurs when a bullish candlestick (one with a higher close than open) completely engulfs a bearish candlestick (one with a lower close than open), or a bearish engulfing pattern, which occurs when a bearish candlestick engulfs a bullish candlestick. Engulfing patterns can be a strong indication of a trend reversal and are often used by traders as a signal to enter or exit a trade.
Look for a bullish or bearish engulfing pattern to form on the chart. This can be on any time frame, but it is usually most effective on higher time frames like the daily or weekly chart.
Confirm the pattern by looking at the surrounding price action. The body of the engulfing candle should completely cover the body of the previous candle.
Look for a high-probability entry point. This is usually a few pips above or below the high or low of the engulfing candle, depending on the direction of the trade.
Place a stop loss order a few pips beyond the opposite end of the engulfing candle. For example, if you are buying, your stop loss should be a few pips below the low of the engulfing candle.
Take profit at a predetermined level, or use a trailing stop to capture profits as the market moves in your favor.
It is important to remember that no trading strategy is foolproof, and engulfing candle patterns do not always lead to successful trades. It is always a good idea to use risk management techniques like stop loss orders to protect against potential losses.
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