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Engulfing Pattern (Forex Education).

<h1>Bearish Engulfing</h1>

A bearish engulfing pattern consists of two candlesticks. A smaller green candlestick would be followed with a red candlestick that is larger than it. What this means is that selling pressure has overwhelmed buying pressure. For this pattern to be significant, the market has had to be in a defined uptrend before the occurrence of this pattern.

The long red candle engulfing the entire trading range of the previous candle is signaling that the uptrend might be changing and traders with long positions should be careful.

The bearish close beneath the prior candle is confirmation that the trend has changed and traders who are long should look to exit their positions.

<img class="hand" onload="resizeImg(this,480)" src="http://img.ibtimes.com/www/data/articles/full/2010/07/21/15057.png" alt="" />

<h1>Bullish Engulfing Pattern</h1>

A bullish engulfing pattern consists of two candlesticks. A smaller red candlestick would be followed with a green candlestick that is larger than it. What this means is that buying pressure has overwhelmed selling pressure. For this pattern to be significant, the market has had to be in a defined downtrend before the occurrence of this pattern.

The long green candle engulfing the entire trading range of the previous candle is signaling that the downtrend might be changing and traders with short positions should be careful.

The bullish close above the prior candle is confirmation that the trend has changed and traders who are short should look to exit their positions.

<img class="hand" onload="resizeImg(this,480)" src="http://img.ibtimes.com/www/data/articles/full/2010/07/21/15058.png" alt="" />
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Publication:International Business Times - US ed.
Date:Jul 21, 2010
Words:275
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