I have been backtesting many known strategies. I have created this Engulfing Candle indicator which makes it easy to detect engulfing candles. I have also added a short/long signals.
Description:
Engulfing candle: If a candle's high is higher than the previous candle's high and low is lower than previous candle's low, it is called Engulfing Candle. If the Engulfing candle's color is red, it is bearish, if green it is bullish.
Strategy: There are many strategies out there. The most known is creating pending orders after a few pips away from the direction of the engulfing candle. Assuming we have a bullish engulfing candle. At the beginning of the next candle, we simply create a buy-stop order (pending order) over 5 pips of the previous candle's (engulfing candle) high. Let's say bullish engulfing candle's high was 1.16051. In this case, we create a buy-stop at 1.16101. Also please take spread into account! If our order is not filled in the same candle, simply cancel the pending order.
This indicator does not repaint. Once signal occurs, it will not be removed. However, engulfing candle's type (bearish or bullish) can only be confirmed by the end of the bar!
I actually don't use Engulfing candle's in my trading. I am sharing this indicator in case you may need it.
Disclaimer: Past performance is not an indication of future performance. All the information in this article, including the algorithm & indicator, was provided and published for informational purposes only and should not be considered legal or financial advice. Use at your own risk!