The engulfing bar setup
The engulfing bar is my favourite setup of the lot. They are very simple to spot and what I need to see for it to be a valid engulfing bar, is the high and low to be greater than the high and low of the previous candle, the reverse of an inside bar.
There are two types of engulfing bars:
- Bullish engulfing bars (BUEB), these need to be traded from swing lows to go long
- Bearish engulfing bars (BEEB), these need to be traded from swing highs to short the market
The two examples of an engulfing bar are shown below:
I also need the engulfing candle to close within the last 1/3 of the candle inline with the direction of the trade.
Again, just like the pin bars I trade the engulfing bars as reversal candles ( not continuation candles) and so not only must they be large in size but form at swing points.
To take a short trade the engulfing candle must be bearish and form at a swing high, this is known as a bearish engulfing bar (BEEB). Example below;
To take a long trade the engulfing candle must be bullish and form at a swing low, this is known as a bullish engulfing bar (BUEB). Example below;
Check out my video on engulfing bars.
Module 1: The Basics
- Unit 1: What is the Forex?
- Unit 2: Forex terminology
- Unit 3: Fundamentals v technical analysis
- Unit 4: What is price action?
Module 2: Market Analysis
- Unit 1: How to analyse the markets
- Unit 2: What types of trades can we use?
- Unit 3: Marking support and resistance levels
- Unit 4: Time frames/best times to trade
Module 3: Price Action Setups
- Unit 1: Price action setups introduction
- Unit 2: Pin bar
- Unit 3: Engulfing bar
- Unit 4: Inside bar
- Unit 5: Sandwich combo setup
Module 4: Chart Setup
Module 5: Trade Management
- Unit 1: Trade plan
Module 6: Trade Psychology
- Unit 1: Psychology introduction
Module 7: Continue your learning
- Unit 1: What next?