Engulfing Candlestick Pattern is one of the most important trend reversal patterns. An engulfing pattern is formed when the previous candle is engulfed by the new candle in the opposite direction. If the previous candle is bullish the next bearish candle completely engulfs that bullish candle. When a bullish candle is followed by a big bearish candle it can only mean one thing. The bears have total control of the market. The trend is reversing. There are two types fo Engulfing Patterns: Bullish Engulfing Pattern and Bearish Engulfing Pattern. Take a look at the following AUDUSD H4 chart.
You can see the bullish engulfing pattern highlighted. After that the market moved almost 200 pips. So you can well imagine how much powerful this pattern is. In the above screenshot you can see a bearish candle is being engulfed by a bullish candle. The low of the bullish candle is below the low of the bearish candle while its high is above the high of the bearish candle at the same time the open of the bullish candle is below the close of the bearish candle and the close of the bullish candle is above the open of the bearish candle. These conditions are important.
Price action is the most important leading indicator. Trading price action is also known as Naked Trading. There are many pro traders who are naked traders. You see all indicators are lagging and only signal when the move is almost over. Price action is the only indicator that is leading in nature. Engulfing pattern is a very important price action pattern. If you know how to code you can easily code these conditions and then let the EA trade this pattern.
You can see this pattern has been coded in the above screenshot. You can download this Engulfing Pattern Trading Robot FREE . This is a pure price action trading strategy ea that does not use any other indicator or filter. You can visit this link and go through the whole article that explains in detail the developed of this EA. If you are learning MQL4 coding, this article can teach you a lot of how to correctly code an EA. If you don’t know MQL4, don’t worry. Just download the EA and install it on your account and let it trade. It will only open a trade when the strict condition of an engulfing candle will be met.