Time to move on to our next reversal pattern, known as the “Bullish Engulfing!
So basically, this two-candlestick reversal pattern usually marks the end of a downtrend or decline.
Now in the bullish engulfing the first candle has an ideally small black body. Also, it is usually facing in the direction of the downtrend, that is “showing off” the sellers’ strength.
Moving on, the second candlestick is a long candle that opens below the prior close.
Subsequently, it closes above the previous black body signaling the end of the downturn and the beginning of a move in the opposite direction.
The signal for the bullish engulfing is usually to buy when the next candle exceeds the high of the pattern.
Don’t forget that a protective stop loss is suggested at the low of the pattern, to help you protect your capital!
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