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Bullish Engulfing Candlestick Pattern

What is a Bullish Engulfing Candlestick Pattern

A Bullish Engulfing candlestick pattern is a two candlestick reversal pattern.  The first candle has a small red body.  The second candle has a large green body and it engulfs the small red candle.

What is a bullish engulfing candlestick pattern

When to Trade a Bullish Engulfing Candlestick Pattern

The bullish engulfing candlestick pattern serves as a reversal pattern.  Look for the pattern to form at the end of a downtrend or at an area of support.

Downtrend

 

How to Trade a Bullish Engulfing Candlestick Pattern

Trade Setup

Entry Option #1

When trading a Bullish Engulfing candlestick pattern at an area of support or end of a downtrend wait for price to break the high of the pattern.  Enter a buy order at the break of the high.  Alternatively, you may choose to place a Buy Stop order after the pattern forms.

Place your stop loss several pips below the low of the pattern.

 

Entering a price action trade

Entry Option #2

A more conservative entry would be for traders to wait until price breaks the high of the Bullish Engulfing candlestick pattern and then retraces approximately 50% of the range of the pattern.

Place your stop loss several pips below the low of the pattern.

Alternative candlestick pattern

Bullish Engulfing Candlestick Pattern Trading Video

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Doji Candlestick Pattern




What is a Doji Candlestick Pattern

A doji is one of the easiest candlestick patterns for traders to identify.  It is comprised mostly of a wick and has a small real body.  A doji is formed when price opens and closes at (or near) the same price.

Doji

When to Trade a Doji Candlestick Pattern

The doji candlestick pattern occurs frequently, but blindly trading candlestick patterns at the break of the high or low of the pattern is a bad idea and will likely result in a low win-to-loss ratio.

A doji can serve as a powerful continuation or reversal signal when traded at key levels.  Traders should look for the candlestick pattern to form at an area of support before entering a buy order and at an area of resistance for a sell order.

How to Trade a Doji Candlestick Pattern

Trade Setup

Entry Option #1

When trading a doji at an area of support (see example below) wait for price to break the high of the pattern.  Enter a buy order at the break of the high.

At an area of resistance enter a sell order when price breaks the low of the candlestick pattern.

If trading a higher time frame such as the Daily chart you may want to refer to a lower time frame, such as the 1-hour or 15-minute chart to confirm that momentum is building prior to entering the trade.

Place your stop loss several pips on the opposite side of the doji.

Trading a doji

Entry Option #2

A more conservative entry would be to wait until price breaks the high of the doji (when buying) or the low (when selling) and then price retraces approximately 50% of the range of the candlestick pattern.

Place your stop loss several pips on the opposite side of the doji.

Alternative doji candlestick

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Forex | Futures | Equities Trading: EUR/USD, E-mini, AAPL Key Trading Levels

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Forex Trading: How to Trade Price Action Bullish Harami Candlestick Pattern (#6)

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Bullish Harami Candlestick Pattern

What is a Bullish Harami Candlestick Pattern

A bullish harami is a reversal candlestick pattern. It is a two candlestick pattern.  The first candlestick is bearish and has a large body.  The second candlestick is bullish with a small body that is encompassed within the first candlestick.  Ignore the wicks.

Bullish Harami_blog

When to Trade a Bullish Harami Candlestick Pattern

Reversal candlestick patterns are more successful when traded at levels of support or resistance.  In this case, the bullish harami pattern which frequently acts as a continuation pattern would be identified in a downtrend and the trade would have a greater chance of success if taken at an area of support.

How to Trade a Bullish Harami Candlestick Pattern

Trade Setup

Entry Option #1

Price has reached an area of support and a Bullish Harami has formed during downtrend.  Enter long on a break above the high of the candlestick pattern.

Price action candlestick pattern

Place your stop loss a few pips below the low of the pattern.

Your profit target should be at least 1-2 times the range of the candlestick pattern.  For example, if the range of the candlestick pattern is 100 pips, your profit target would be at least 100 pips.

Entry Option #2

The second option for entering the trade would be the same as above except after price breaks the high of the pattern you would wait for price to retrace within the range of the Bullish Harami.  A 50% retracement of the candlestick pattern would allow for a great entry and tighter stop loss placement.

Bullish Harami_blog2

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Forex Trading: EUR/USD Technical Analysis Week of June 12, 2016

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Forex Trading: How To Trade Price Action Bearish Harami Candlestick (#5)

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Bearish Harami Candlestick Pattern

What is a Bearish Harami candlestick pattern

A bearish harami is a reversal candlestick pattern. It is a two candlestick pattern.  The first candlestick is bullish and has a large body.  The second candlestick is bearish with a small body and is encompassed within the first candlestick.

Bearish Harami Candlestick Pattern

Trade Setup

Reversal candlestick patterns are more successful when traded at levels of support or resistance.  In this case, the bearish harami pattern which frequently acts as a continuation pattern would be identified in an uptrend and the trade would have a greater chance of success if taken at an area of resistance.

Trade Entry, Profit Target and Stop Loss Placement

Entry Option #1

Price has reached an area of resistance and a Bearish Harami has formed during an uptrend.  Enter short on a break below the low of the candlestick pattern.

Bearish Harami entry option #1

Place your stop loss a few pips above the high of the pattern.

Your profit target should be at least 1-2 times the range of the candlestick pattern.  For example, if the range of the candlestick pattern is 100 pips, your profit target would be at least 100 pips.

Entry Option #2

The second option for entering the trade would be the same as above except after price breaks the low of the pattern you would wait for price to retrace within the range of the Bearish Harami.  A 50% retracement of the candlestick pattern would allow for a great entry and tighter stop loss placement.

Bearish Harami Entry option #2

Learn More

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Forex Trading: EUR/USD Technical Analysis Week of June 5, 2016

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Forex Trading: How To Trade Price Action Marubozu Candlestick (#4)

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