Welcome to bullish engulfing patterns - I
Bullish Engulfing (Bullish)
How to recognize it?
- There must be a preceding downtrend
- A short of red candle followed by a longer green candle
- The green candles open lower and closes higher than the red candle completely engulfing it
What is the psychology behind?
- The red candle implies the control of the bears followed by a prolonged downtrend
- In next session, the market opens below the low of the red candle suggesting continuation of the bearish forces
- The bears then lose momentum, the bulls take charge and lead the price of doing the session and eventually managed to close above the high of the red candle
- The bulls have now full overridden the bears
How do we trade it?
- Look for the bullish engulfing at the bottom of a downtrend
- Wait for the next candle to close above the high of the green candle to confirm the existence of bullish force
- Open a long position on confirmation
- Place a stop loss below the lower green candle
Glossary of Trading - https://thestocksexpress.blogspot.in/2018/02/understanding-glossary-of-trading.html
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