Introduction to the Engulfing Candle Indicator
The Engulfing Candle Indicator 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.
The Engulfing Candle Indicator fits all kinds of timeframes and currency pairs. It is displayed directly on the main trading chart. The default settings can be modified directly from the input tab. Feel free to experiment with the settings and parameters to fit your personal preferences.
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.
How to set up the Engulfing Candle indicator in MT4?
Download the Engulfing Candle.rar archive at the bottom of this post, unpack it, then copy and paste the Engulfing Candle.ex4 or Engulfing Candle.mq4 indicator files into the MQL4 folder of the Metatrader 4 trading platform.
You can gain access to this folder by clicking the top menu options, which goes as follows:
File > Open Data Folder > MQL4 > Indicators (paste here).
Now go to the left side of your MT4 terminal. In the Navigator find the gauge name, right-click it and select Attach to the chart.
The Engulfing Candle indicator is well worth adding to your trading collection but remember about having realistic expectations. Just like any other technical analysis tool, is not capable of providing accurate signals 100% of the time. Thus, this forex indicator provides false signals occasionally. Its performance will vary significantly depending on market conditions. Feel free to develop your own trading system based around it.
Engulfing Candle Indicator Free Download
To download the Engulfing Candle Indicator for Metatrader 4 (MT4) for free just click the button below: