- 9 лет ago
- Published в: Last winner ethereum
- 0
- Автор: Yocage
The real body of an up candle is often white or green. The high and low prices for the period may be indicated by thin lines that look like wicks of the candle and that extend beyond the real body. A bearish engulfing candle occurs when the real body of a down candle completely envelops the real body of the prior up candle.
A bullish engulfing candle occurs when the real body of an up candle completely envelops the real body of the prior down candle. These engulfing candles indicate a strong shift in direction, and when combined with observation of the price-trending direction that precedes it, this shift creates the opportunity for a trading strategy. Key Takeaways The first step in applying the engulfing candle day-trading strategy is to determine the dominant trend direction, and thus the direction you will trade-in.
Once the trend is established, wait for a pullback. If there is no trend, or it is unclear, don't utilize this strategy. With the trend isolated and a pullback occurring, wait for the engulfing candle strategy trade signal. A rule of thumb is to make sure your winners are at least one-and-one-half times as big as your losers; two times bigger is even better. Isolate the Trend The first step in applying the engulfing candle day-trading strategy is to determine the dominant trend direction, and thus the direction you will trade-in.
An uptrend is defined by higher-swinging highs and higher-swinging lows in price. Prices move in waves, advancing, pulling back, and then advancing again. In an uptrend, the advancing waves are larger than the pullbacks lower, creating overall progress higher. During an uptrend, you should take only long positions, buying with the intention of selling later at a higher price.
A downtrend is defined by lower-swinging lows and lower-swinging highs in price. In a downtrend, the declining waves are larger than the pullbacks higher, creating overall progress lower. During a downtrend, you should take only short positions, selling a borrowed asset with the intention of buying and returning it later at a lower price.
Watch for an Upward or Downward Pullback Once the trend is established, wait for a pullback. If there is no trend, or if it is unclear, don't utilize this strategy. Waiting for a pullback means you're getting advantageous pricing for the next wave of the trend when—and if—it unfolds. If the trend is down, watch for an upward pullback. The pullback should not rally above the high of the prior pullback, as this violates the rules of a downtrend.
If the trend is up, watch for a downward pullback. The pullback should not drop below the low of the prior pullback, as this violates the rules of an uptrend. A pullback should be composed of at least two price movements, indicating the price has actually corrected. Pullbacks may move in the opposite direction of the trend or may just move sideways. You want it to be far away so your trade has a greater profit potential before selling pressure steps in.
And how do you find such trading opportunities? After a strong momentum moves into Support. The bigger and bolder the candles, the better. This is especially true if the size of the candle is small or of similar size to the earlier candles.
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How to Trade the Bearish Engulfing Pattern 🏯KNF OSTRZEGA FOREX FACTORY
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