🚀 Unleash the power of technical analysis by mastering the Bearish Engulfing Pattern. This widely-recognized candlestick pattern is a game-changer for traders who can successfully identify and capitalize on it. In this article, we’ll reveal the secrets of trading the Bearish Engulfing Pattern on eToro in 2023, making sure you’re well-equipped to turn this pattern into profits.
💡 Key Takeaways
|→Understand the Bearish Engulfing Pattern and its significance in trading|
|→Discover how to identify and analyze the pattern in various market trends|
|→Learn how to execute winning trades using the Bearish Engulfing Pattern on eToro|
|→Find out the best practices and strategies for optimizing your trades|
🐻 What is a Bearish Engulfing Pattern?
Table of content
- 🐻 What is a Bearish Engulfing Pattern?
- 😲 Anatomy of a Bearish Engulfing Pattern
- 🛑 Stop Loss and Sell Position Strategies
- 💹 Trading the Bearish Engulfing Pattern on eToro
- 🔍 Real-World Examples on eToro
- 🥇 Example 1: GOLD
- 🚀 Example 2: Google (GOOG)
- 🌟 Final Thoughts
- Trading Technical Analysis: • Learn more📝
- Trading Basics:
- Candlestick Patterns:
- Contrarian Trading and Pattern Recognition:
- Trading Patterns and Strategies:
- Market Sentiment and Volatility:
- Technical Analysis:
- Trading Patterns:
- Trading Features & Strategies:
- Indicators & Analysis:
- Market Conditions & Trading:
- GENERAL RISK WARNING
- Author & Expert Trader - Financial Analyst :
A Bearish Engulfing Pattern is a technical analysis tool that signals a potential trend reversal from bullish to bearish. This pattern is formed by two candles: a smaller bullish candle followed by a larger bearish candle, with the latter “engulfing” the former. Traders can use this pattern to identify optimal entry and exit points for short and long positions in various market trends.
😲 Anatomy of a Bearish Engulfing Pattern
To qualify as a Bearish Engulfing Pattern, the bearish candle must have an opening price higher than the closing price of the bullish candle, and a closing price lower than the opening price of the bullish candle. Moreover, the tails of the bearish candle should be longer than those of the bullish candle.
📈 Although this pattern typically appears at the end of a long bullish trend, it can also form within swings or short uptrends.
🛑 Stop Loss and Sell Position Strategies
For short trades, a stop loss can be set at the end of the upper wick of the bearish candle. For long trades, an ideal sell position to avoid losses from a potential trend reversal would be at the closing price level of the bearish candle.
💹 Trading the Bearish Engulfing Pattern on eToro
Spotting a Bearish Engulfing Pattern on eToro is simple if you know where to look. Focus on the peaks of a trend or at the end of a bullish trend. Once you’ve identified a potential pattern, verify that there’s significant buying pressure on the left side before the pattern. Next, confirm that the body of the bearish second candle engulfs the body of the bullish first candle by drawing horizontal trendlines at the ends of the tails or bodies of the second candle.
🔍 Real-World Examples on eToro
Let’s explore some real-world examples of the Bearish Engulfing Pattern on eToro to better understand how this pattern is applied in actual trading situations.
🥇 Example 1: GOLD
In this example with the GOLD asset, we can see three Bearish Engulfing Pattern formations (indicated by red arrows). The first condition – the pattern’s location – is confirmed, along with the bullish trend from its left side. Finally, each second candle in all occurrences has significant dimensions compared to the first candles.
As mentioned earlier, the ideal exit points for short trades would be at the tip of the upper tail, while the ideal exit point for long trades to avoid losses would be at the closing price level of the bearish second candle.
🚀 Example 2: Google (GOOG)
In this case, the Bearish Engulfing Pattern appears on an uptrend for Google (GOOG) – particularly within the swings. The patterns form at the peak of every swing, as shown by the red arrows. Additionally, the left side before the pattern displays strength from buyers.
In this particular example, a trader would have won multiple trades with the Bearish Engulfing Pattern as long as the correct exit or stop-loss points were established. Furthermore, we can see that the pattern is highly effective when trading with swings, tranches, or when compounding.
🌟 Final Thoughts
The Bearish Engulfing Pattern can occur in all types of trends – whether uptrend, downtrend, or sideways. If it’s not visible on a daily range, it can be found within smaller range intervals such as hourly or minute-range. Bearish Engulfing Pattern candles with substantial bodies present a more significant trend reversal than those with smaller bodies or dimensions.
Ultimately, what really distinguishes a pattern as a Bearish Engulfing Pattern is the difference in the body of the first and second candle and the color of the candle. The second candle should be bearish (red) and should completely overwhelm or engulf the first candle.
While trading with the Bearish Engulfing Pattern may seem like a foolproof strategy, it takes practice and experience to profit consistently from trades using this pattern. With an eToro virtual account, you can trade the Bearish Engulfing Pattern in real-time without spending a dime. Simply create your own eToro account and check out the virtual portfolio to trade with virtual funds.
🎉 Good luck and happy trading!
Trading Technical Analysis: • Learn more📝
Contrarian Trading and Pattern Recognition:
Trading Patterns and Strategies:
Market Sentiment and Volatility:
- Bearish Engulfing Pattern
- Bullish Engulfing Candle Stick Pattern
- Morning Star and Evening Star
- Morning Star Pattern
- Railway Tracks Candlestick Pattern
- Shooting Star Candlestick Pattern
- How to Use Triangle Pattern
- How to Trade Three White Soldiers Candlestick Pattern
- Rainbow Pattern
- Understanding Flag Patterns
- How to Trade Bullish Engulfing Pattern
Trading Features & Strategies:
Indicators & Analysis:
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GENERAL RISK WARNING
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- ▸eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.
Author & Expert Trader - Financial Analyst :
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