A bullish engulfing candle occurs after a significant downtrend. Note that the engulfing candle must encompass the real body of the previous candle, but need not surround the shadow.
In order for the Bullish Engulfing signal to be valid, the following conditions must exist:
• The Forex pair must have been in a definite downtrend before this signal occurs. This can be visually seen on the chart.
• The second candle on hourly, 4 hour or daily candle of the signal should be a green (blue on my example) candle opening below the Close of the previous day and closing above the Open of the previous day’s black candle.
I just place enter order at start of next candle after engulfing candle concludes, with a stop loss at below of this candle or on example hourly chart of EURCAD related to ADR, place stop loss at 20 pips for day trade- exit when price action or target hits 40 pips. 1:2 risk reward setup.
In order for the Bullish Engulfing signal to be valid, the following conditions must exist:
• The Forex pair must have been in a definite downtrend before this signal occurs. This can be visually seen on the chart.
• The second candle on hourly, 4 hour or daily candle of the signal should be a green (blue on my example) candle opening below the Close of the previous day and closing above the Open of the previous day’s black candle.
I just place enter order at start of next candle after engulfing candle concludes, with a stop loss at below of this candle or on example hourly chart of EURCAD related to ADR, place stop loss at 20 pips for day trade- exit when price action or target hits 40 pips. 1:2 risk reward setup.