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Author Bart Bregman

Bart Bregman

Author & Financial Analyst: 9 Years of full-time trading experience. "There is no such thing as a bad trade."

Disclaimer: The information provided on this blog should not be seen as financial advice, and is only intended for entertainment and informational purposes.

How To Trade The Bullish Engulfing Candle Stick Pattern On eToro

One of the most straightforward candlestick patterns in both forex and stock trading is the Bullish Engulfing Candle Stick Pattern. This is a prized pattern for traders not only because it is a sign of reversal toward a bullish market but it is also easy to spot in a chart. In this article, weโ€™ll provide you with all you need to know about the Bullish Engulfing pattern and how you can use it to win trades on actual trading platforms like eToro.

What is the Bullish Engulfing Candlestick Pattern?

Table of content

  • What is the Bullish Engulfing Candlestick Pattern?
  • How to implement the Bullish Engulfing Pattern on an actual trade
  • Conclusion
  • Trading Technical Analysis: โ€ข Learn more๐Ÿ“
  • 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 Bullish Engulfing Candlestick Pattern is a candlestick formation that signals a reversal โ€“ from a bearish trend toward a bullish trend. it is usually found at the bottom of a bearish trend or downtrend but can also be found on trenches of a downtrend market.

Bullish Engulfing candles

This pattern is easy to spot in a chart because it appears when prices go down and are only made up of two candles – a bearish first candle and a bullish second candle. To be considered as a Bullish Engulfing candlestick pattern, the bearish first candle should have a low that is lower than the previous candle and the bullish second candle should have a body that engulfs the bearish candle โ€“ thus the name bullish engulfing. The bullish candle should have a body and tail that totally overcomes the bearish candle. The thicker body of the bullish candle signifies the overpowering strength of the buyers which enables the trend to go at a reversal.

In the image below, the right side of the chart shows a downtrend through the series of bearish candles. Each bearish candle has lower highs and lows with a varying tail or shadow sizes. At the bottom of the trend, a bullish candle that engulfs the previous bullish candle develops which completes the formation of the Bullish Engulfing pattern. Notice that the body of the bullish candle is much bigger than the bearish candle prior to it. It has a bigger body that engulfs the bearish candle with its tail combined.

After the formation of the pattern, the trend reverses to a bullish trend creating higher highs and higher lows.

How to implement the Bullish Engulfing Pattern on an actual trade

As mentioned earlier, the Bullish Engulfing candlestick pattern is found at the end of a bearish trend but can also found below trenches โ€“ as shown in the image below.

Below is an example of a Bullish Engulfing pattern formation on the asset โ€“ Apple. We can notice from this example that the pattern formed within trenches or somewhere within an uptrend. As the price went down momentarily, the bounce back happened after the formation of the pattern. The best entry points in this example would be at the closing of the bullish candle or at the highest end of the bearish candle from the pattern.

Bullish Engulfing Candle Stick Pattern

Hereโ€™s another example of a Bullish Engulfing pattern formation for the asset โ€“ HD (Home Depot Inc). In this example, the pattern formed at the end of a downtrend. Just like the previous example, notice the more prominent body of the bullish candle which engulfs or overpowers the bearish candle. This signals strength among buyers and trend reversal towards a bullish trend.

Bullish Engulfing pattern on HD

The Bullish Engulfing pattern is quite easy to find in any trend except for a trend that is on consolidation. A trend in consolidation is usually composed of a non-volatile price action where there is not much price movement.

From the examples provided, the best entry points would be established by referring to the previous open of the bearish candle. By referring to the examples, we can notice that the price after the pattern reached the opening of the bearish candle. It reached the opening price using its body or its tail. So for safe entry points, it is best to consider the bearish candleโ€™s opening price.

Conclusion

The Bullish Engulfing Pattern is among the most basic candlestick patterns that are easy to spot and interpret in a chart. It is a powerful signal of a possible bullish trend thus providing potential gains for a trader. potential risks of wrong entries can be averted by considering the price movement of the bearish candle in the pattern – as mentioned earlier, the best entry point would be the opening price of the bearish candle.

Only by understanding the candlestick pattern can one trader be effective in using such a pattern. With diligent research about a given stock along with constant practice in using the Bullish Engulfing pattern, a trader has better chances of making smart and profitable decisions in trading.

Trading Technical Analysis: โ€ข Learn more๐Ÿ“

Trading Basics:

  • Algorithmic Trading on eToro
  • Buy Rumor, Sell News Strategy on eToro
  • Breakout Trading on eToro
  • Contrarian Trading on eToro
  • Commodity Spreads on eToro

Candlestick Patterns:

  • Candlestick Patterns on eToro
  • Bollinger Bands on eToro
  • Breakout Trading on eToro
  • Commodity Spreads on eToro

Contrarian Trading and Pattern Recognition:

  • Contrarian Trading on eToro
  • Pattern Recognition on eToro
  • Day Trading on eToro Tips
  • DE Ratio on eToro

Trading Patterns and Strategies:

  • eToro Risk Reward Ratios
  • Trade the Evening Star Pattern on eToro
  • Stair Steps Pattern with Trendlines
  • Guide to Using Pin Bar Candles on eToro

Market Sentiment and Volatility:

  • Analyze Market Sentiment
  • Volatile Market Trading Strategies
  • Bull Market Top Tips for Traders
  • Bear Market Strategies for Traders
  • Volume Indicators in Trading
  • Trading in a Flat Market
  • Understanding Market Trends

Technical Analysis:

  • Using Moving Averages in Trading
  • Understanding Support and Resistance in Trading
  • Using Retracement in Trading
  • Using Trendlines in Trading

Trading Patterns:

  • 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:

  • eToro's Risk Score Feature
  • Market Cycles on eToro
  • Mastering Trading Journals
  • Mastering Volatile Candlestick Patterns
  • Mastering Volatility Spreads
  • Price Action Trading
  • Range Trading

Indicators & Analysis:

  • Leading & Lagging Indicators
  • Moving Average
  • Oscillator Indicators
  • Parabolic SAR Indicator
  • Sentiment Analysis on eToro
  • Strategy Backtesting
  • Technical & Fundamental Analysis
  • Technical Indicators
  • Guide to Using the EMA Indicator

Market Conditions & Trading:

  • Best Trading Tools for Bearish Market Conditions
  • Best Trading Tools for Volatile Market Conditions
  • Long-Term Trading Patterns
  • Bear Market on eToro
  • Trading Signals on eToro 2023
  • What is Shorting on eToro?
  • What is Stock-to-Flow Ratio?
  • Support and Resistance Levels


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GENERAL RISK WARNING

  • โ–ธeToro is a multi-asset platform that offers: Stocks, Crypto assets, and CFDs.
  • โ–ธCFDs are complicated and can make you lose money quickly because of leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. Think about if you understand how CFDs work and if you can afford to take the risk of losing your money.
  • โ–ธPast performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
  • โ–ธCopy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
  • โ–ธCryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
  • โ–ธeToro 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.
  • Be warned!


Author & Expert Trader - Financial Analyst :

Bart Bregman
My name is Bart Bregman and I am a full-time professional trader with nine years of experience. I specialize in shorter-term trading using technical analysis, and I have extensive experience with Stocks, CFDs, Options, and Crypto trading. I believe that there is no such thing as a bad trade. I'm currently traveling the world as a digital nomad trader. You can follow my journey on Instagram at https://www.instagram.com/bart_bregman/

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