Common Candlestick Patterns on Forex: Engulfing Bars

I will write about candlestick patterns and examples on this blog because these are very useful and effective concepts. The success rate is high because I and some other price action traders can tell that the price contains the enough information for trading decision. However, the tools should use with other indicators or support/resistence level or any other analysis tool to suppourt the decisions. Today I want to write most common and known candlestick pattern that called engulfing bars.

It is easy to determine that there are two engulfing pattern. These are bearish and bullish engulfing patterns. Below the pictures that define these bars. The easy definiton is the second bar completely engulf the previous bar, if the second bar bearish it is called bearish and vice versa. In the below picture, black bar is bullish bar and white bar is bearish bar.



To use this bars some key criterions should be observed if a strong signal is wanted. My personal look at these bars are like that:

1- In retracement levels with trend direction.

2- Key support and resistence levels for the reversal signals are very important. Bearish engulfing bars on resistence levels and bullish engulfing bars on support levels are stronger.

3- Volume indicators can give very good signals. If the engulfing bar occur with the higher volume, the reversal pattern can be seen more probably.

Here is an example that bearish engulfing bar:

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GBPCHF - 4H SETUP - 05.03.2014 - SHORT

GBPCHF - 4H Setup - 05.03.2014 by MoneyTalks58 on TradingView.com

Market was indecisive on previous bar with long legged doji. After that bears took the control around the upper ichi cloud boundary. Stoch is on overbought area and cross over the top. A retracemen is possible.

4 of a Kind: Russia - Ukraine - USA - EU

We all know the Ukranian-Russia crisis. Although today Putin declare told about optimistic things to decrease tension, the general opinions are on the tension won't be over in short term. Today first bullet sounds occured between the Russian and Ukranian army. The rumors about military interventions continue. Yesterday we observed high raises over commodity prices as Ukraine is a big corn and wheat. Also this is obviously seen that gold, gas, wti prices are increased. Today was optimistic and so we saw retracements on these prices and records on SP500.

As Ukraine and Crimea are very important for Russia that geographically strategical, Putin's words can't be understood very optimistic. Therefore tensions can make commodity prices higher and on medium term negative impacts can be expected unless there won't be peaceful days are coming.

Will there be any enforcement during the UN and NATO meetings? We are going to wait espacially NATO countries attidutes. Probably the more volatile days are waiting us. I hope democracy and peace will win.

GBPJPY - DAILY SETUP - 03.03.2014

GBPJPY - Daily Setup - 03.03.2014 by MoneyTalks58 on TradingView.com

There is a hangin man candlestick pattern on 27.02.2014. It is below the ichi cloud. After that price deeply enter the cloud. Short movement can be possible. Momentum is also below zero level. I will try it.

NZDUSD - DAILY SETUP - 03.03.2014 - Short Signal

NZDUSD - Daily Setup - 03.03.2014 by MoneyTalks58 on TradingView.com

NZDUSD is around the previous resistence levels. Prior 2 pinbar was the sign of bearish movement and now we again see a pin bar with RSI and Stochastic also support previous bearish price action again. USD can gain momentum against this commodity currency.

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XAUUSD - 1H Setup - 02.04.2014 - Short

Edit: Cancelled. Market opened with huge gap.

Large pin bar with high volume. Bulls couldn't win the game near the prior weeks closing time.The down movement can continue to 1323 level.

USDCHF - DAILY SETUP - 01.03.2014

USDCHF - Daily Setup - 01.03.2014 by MoneyTalks58 on TradingView.com

Price broke the strong support and wedge formation. It is possible to see a movement thorugh the 0.86 level. MACD and CCI support. Nice to try.

EURUSD - Daily Setup - 01.03.2014

EURUSD - Daily Setup - 01.03.2014 by MoneyTalks58 on TradingView.com

Hit the take profit. +30 pips.

EURUSD showed a bullish momentum but now we can expect a retracement for short term and take some 40-50 pips. Worth to try.