Attila the trader
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For an engulfing candle to form should the second candles body cover the first or is it ok if only the wicks of the second candle covers the first one .
Engulfing candles
- Thread starter Attila the trader
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The body of the second candle must extend higher and lower than the body of the first . Ignore the wicks (shadows) if using an engulfing pattern for decision-making.
The price direction of the engulfing body of the second candle should also be opposite to the first candle's body's price direction. So if the first candle shows a fall in price from open to close, the second candle should show a price rise from open to close - they should be of opposite colours.
There is a problem trading engulfing candles off all intra-day charts and off daily forex charts. This is because these candles show continuous time, there is no closed session between the close of one candles and the open of the next. Therefore, it is common for the second candle to open at exactly the same price as the first one closed, and it is rare for this difference if it exists to be very large. So technically, a candle with the same close as the next candle's open is not an engulfing candle, so expect the pattern's performance in such circumstances to be weaker than the textbooks say.
The price direction of the engulfing body of the second candle should also be opposite to the first candle's body's price direction. So if the first candle shows a fall in price from open to close, the second candle should show a price rise from open to close - they should be of opposite colours.
There is a problem trading engulfing candles off all intra-day charts and off daily forex charts. This is because these candles show continuous time, there is no closed session between the close of one candles and the open of the next. Therefore, it is common for the second candle to open at exactly the same price as the first one closed, and it is rare for this difference if it exists to be very large. So technically, a candle with the same close as the next candle's open is not an engulfing candle, so expect the pattern's performance in such circumstances to be weaker than the textbooks say.
