Engulfing reversal pattern is the strongest reversal pattern from all Japanese candlestick patterns (from my experience). It consists of 2 consecutive candles in opposite colours, for this reason I believe its is even stronger that widely popular single candle pin bar.
As with pin bars - engulfing patterns should be easy to spot on your charts. They should stand out on your chart as they only show reversals. On daily charts you can trade engulfing patterns on they own. On shorter time frames (bellow daily) they can still be ok to trade, but you will need additional filters - like trading with overall daily chart trend or trading only at support/resistance levels or similar filters. And in my experience engulfing patterns work the best on major currency pairs.
Nr 1 rule for engulfing patterns is that there must be in a clear trend before the engulfing pattern. This is not always easy to determine just with your eye - so I like to use some indicators to make things easier. I prefer Bollinger bands as they clearly show when price is in trend (when price is at upper Bollinger band - I consider this an uptrend, when price is at lower Bollinger band I consider this a downtrend) You could…
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