Engulfing
One candle covers the previous one entirely. Sentiment turned around in a single slice of time.
Engulfing — what it is?
Engulfing is a candle whose body completely covers the body of the previous candle of the opposite colour. A bullish engulfing covers a bearish candle, a bearish one covers a bullish candle.
It's the clearest form of initiative changing hands: in one period the other side has undone the whole result of the previous one.
The value of the pattern is that it often coincides with the start of an impulse. An impulse leaves an imbalance behind, and the candle that was engulfed frequently turns out to be an order block.
Engulfing — how it is built?
It's measured by bodies, wicks aren't required. Its significance depends heavily on location: an engulfing in a zone of interest after a liquidity grab is a workable situation, an engulfing in the middle of a range is noise.
Engulfing — common mistakes
Trading engulfing as a standalone signal anywhere on the chart.
Demanding that the wicks be covered too: then the pattern almost never occurs.
Missing that an engulfing usually leaves an imbalance behind — and that's the zone price returns to.
Entering at the end of a move that has already happened.
Related to
Glossary
- candle
- the element of the chart that shows four prices for a period: open, high, low, close.
- candle body
- the rectangle between the open and the close.
- impulse
- a fast directional move with large candles.
- imbalance
- a stretch of chart price went through too quickly, without even trading.
- Order block
- the last candle in the opposite direction before the impulse that broke structure.
- zone of interest
- an area marked up to look for an entry point.
Test yourself
Where is an impulse, not a sluggish drift?
Correct. The app has tasks like this in every lesson — 119 lessons on real charts. Solve in the app →
Not this one. The right answer is the other chart. The app has tasks like this in every lesson — 119 lessons on real charts. Solve in the app →