The engulfing candle can be analyzed easily. When the body of the candle engulfs the previous candle meaning the body, it is to be considered the engulfing candle. It is the indication of the movement of the candle being in an opposite direction as it was engulfed. Then again, when a bearish candle engulfs the bullish candle, the advanced probability direction of the trade over the pair can be shortened. Similarly, when the bullish candle engulfs a bearish candle, the advanced probability direction of the trade over the pair indicates to buy it. It is to be remembered that the reverse direction is not assured when the traders find an engulfing candle. When the certain goes on so far, a trader is to be assured that the candle engulfs the candle. We are not to be certain always about the clearness of the chart moving forward.
The historical 4-hourly chart of the currency pair, the EURGBP can be observed as it can help understand the scenario. In this chart the engulfing candles are summarized. In black, the bullish engulfing is available and in green, the bearish engulfing is seen. The two candles are not the same; however, you will find the decisive factor of the engulfing candle meeting each. Remembering, in the specific instance, when the candlesticks are interpreted, the trader does not take any decisions about the candle whether it is turning out to be or not. It is to wait until the candle is closed. Going through the chart, it is found that the candle being available at the right side of the chart appears as the bullish engulfing. Conversely, as the four hour period is closed, the candle is followed by it. Depending on the pricing action in between the present time and then, it perhaps does not engulf the last candle in any way.
It is always better to wait until a candle is closed before going to make any trading decision on it. The strategy can be implemented for a candle as the engulfing candle is recognized and it is to be dealt with the tread based on the sign of the potential alteration of the direction. It is the alteration in the way of the trend. Similarly, when the downturn is going on, we may try to find the bearish engulfing candles. In the upper-trend we prefer going for the bullish engulfing candles. Whether the trade is to be taken or not it is to be understood. The stop is to be placed beneath a bullish engulfing candle while the uptrend is going on and over the bearish candle engulfing in the downtrend. It is to be noted that there are many engulfing candles over the chart in which a move from the reverse direction did not occur after closing the engulfing candle. It is usual that there is no certainty in the trading.
There is a question of the alteration of the trend. It is obliviously a significant question and the reply is certainly intangible. The answer is not constantly a complete answer that is being entirely white or black.
