The engulfing pattern is one of the most important models signaling about a trend reversal. It is formed by two candles of different colours.
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Engulfing is formed in case of a strong trend on the chart, trend duration doesn’t matter, that is why this strategy is usually used to trade 60 seconds binary options.
This formation is divided into bearish engulfing pattern that appears at the top of a trend and bullish engulfing model that appears at the bottom of a trend.
60 sec Bearish engulfing pattern
There is a pronounced upward trend in the market, when a bearish candle with a black body appears. It absorbs the previous bullish candle with a white body. This indicates that the pressure of sellers is more than of buyers.
Then comes a turning point in the trend direction and it is clear that the initiative is passed to the bears. In this case, traders must wait for confirming signals and then tighten stop band or close some deals.
It should be noted that by switching to a shorter period, traders may note larger fluctuations that can sometimes confuse the decision. After bearish engulfing model appears we recommend buying Put binary options.
60 sec Bullish engulfing pattern
There is a clear downwards trend in the market, which is caused by the presence of black bear candles. Then a bullish white candle appears. It absorbs the previous bearish candle. This is evidence of fracture between bears and bulls.
Sellers can no longer withstand the onslaught of buyers and slowly lose ground. Once you see a bullish engulfing pattern of chosen financial instrument, we recommend buying Call binary options.
60 seconds engulfing binary option strategy is based on the identification of such patterns. We will consider examples on EURUSD currency pair. In order to have a successful trade, it is important to use financial instruments with good liquidity.
The above model can be considered a bearish engulfing. Despite the fact that a shadow of the first candle goes beyond the second, this bearish engulfing model still noteworthy. Below you can see bullish engulfing model.
Engulfing pattern characteristics
Like any other model, engulfing pattern has certain characteristics that must be followed for proper interpretation.
- Presence of a distinct trend (upward or downward).
- This formation is formed by two candles. The second candle absorbs the first.
- Color of the candles should be contrasting.
We should also pay attention to the factors that increase the probability of a trend change:
- If the body of the second candle is sufficiently large and the body of the first – small, then this suggests that the previous trend has exhausted itself and the new is just gaining momentum.
- If the second candle absorbs some of the previous candle, it also indicates on trend strengthening.
- If this formation occurs in the market and with it the volume increased, it indicates a weakening of the previous trend.
60 seconds engulfing strategy is really easy to use and is often used. Analyze the chart right now and you will find engulfing there. Now check your trade, are you making everything right? To make constant profit you have to learn analyzing the candlestick charts.