the way down the USD/CHF pair continues with lower highs and lower lows, which provides for confidence in the downtrend. Forex Engulfing Candle Trading Strategy Final Word I dont trade every engulfing candle I see. The placement of the Stop Loss and Take Profit areas also shows that this trade setup has a good risk-reward ratio, which compensates for losses that may have been sustained earlier. This creates a bearish Engulfing pattern on the chart. This pattern creates a strong potential for a price reversal on the chart. It requires skill in being able to read the market, but provides a better entry priceproviding lower risk and greater profit potential.
For the purposes of this strategy, a bullish engulfing candle occurs when the fat part of an Up candle completely envelops a prior Down candle. Forex Engulfing Candle Trading Strategy, an engulfing candle occurs often. Experienced traders can actively manage trades when this occurs, taking a small profit or small loss. The body of the second candle fully contains the first candle, which completes the shape of the bearish Engulfing pattern on the chart. The best place for a stop loss order in an Engulfing trade is beyond the Engulfing pattern extreme.