Engulfing Candle Indicator
Platform: MT4 Type: Pattern Last update: September 29, 2024The Engulfing Candle Indicator for MT4 is a forex technical analysis tool that comes in handy when you need engulfing bars recognized automatically. It simply relieves the hassle of looking for engulfing candlesticks and picking them manually. There are two types of engulfing patterns – the bullish and bearish engulfing.
That forex indicator is capable of recognizing both of them. When one is recognized, it automatically marks a candle by an upward or downward arrow. As you can see, it is easy to use and both beginners and advanced forex traders can try that Engulfing Candle indicator.
What is Engulfing Pattern?
As the name suggests, the engulfing pattern is one candlestick that completely engulfs the entire candlestick on its left. This can indicate a change in sentiment which may, in turn, be a sign of possible reversal in the trend momentum.
It is mainly used to determine the bullish and bearish patterns of the market, which can occur both in line with the overall trend and counter-trend. Let’s take a look at the picture below that shows a firm bullish engulfing pattern which results in strong upward price movement.
Two Types of Engulfing Pattern and How to Use Them in Trading for Your Benefit?
The engulfing pattern can be divided into two types: Bullish Engulfing Pattern and Bearish Engulfing Pattern.
First one, the Bullish Engulfing indicates that there is a high buying pressure on the market and that more buyers are putting their money than sellers. Bullish engulfing drives the price of currency pair further up.
Similarly, the Bearish Engulfing indicates that there is high selling pressure on the market and that more sellers are putting their money than buyers. It makes the currency pair fall further down. We suggest supporting your trading decisions with some confirmation filters (like support and resistance levels, trendlines, moving averages, etc.) to increase the probability of the signals. Take a look at the picture below to learn how to distinguish these two types.
