Best Way To Trade Bearish Engulfing Pattern
In this article, we will review facts about the Bearish Engulfing Candlestick Pattern and how it affects the price chart.
Bearish Engulfing Candle is one of the most reliable price reversal candlestick patterns.
It is a trend reversal candlestick pattern.
Bearish Engulfing candles show traders that the Sellers (Bears) have taken control of price.
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It prepares the mind of the trader that there is a development of a strong Bearing force, typically against a current uptrend.
Basically, it forms at the end of a bullish trend.
An example is seen in the image below where the green candle overshadows the smaller
However, the image above shows that the red candle is bigger than the green candle.
The green candle, is on the left side while the red candle is on the right.
For one to trade the Bearish Engulfing candlestick, one will place trade entry at point E, as shown in the image below.
Sell Stop pending order can also be placed a little below the closing price point around point E.
Stop loss point sill be at point SL.
For the purpose of Risk Management, the Stop loss point will be at a tiny-pip distance little below the SL area.
Take profit will be twice the total length of the Bearish candle.
The above image shows an example of how a Bearish Engulfing candle forms at the top of a bullish trend.
The red candle fully engulfs the green candle before it.
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