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Brief information about the pattern of engulfing candlestick

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Brief information about the pattern of engulfing candlestick Powered By Docstoc
					               ENGULFING CANDLESTICK PATTERN:

Among the most important of candlestick reversal patterns for stock traders are the engulfing positions, which can
be seen as the opposite of the harami positions.

There are two types, bullish and bearish engulfing pattern.

BULLISH ENGULFING PATTERN:

The bullish engulfing pattern occurs over two candles during a downtrend. The first is a fair-sized descending (red
or black) candle, and the second is a larger ascending (white) candle that completely engulfs the previous time
period’s trading range(refer chart – I): -

        the open of the second candle is higher than the previous day’s close; and

        The close of the second candle is lower than the previous day’s open.

                                                        Chart - I




BEARISH ENGULFING PATTERN:

The opposite of this is the bearish engulfing pattern, which occurs over two candles during an uptrend. First comes a
fair-sized ascending candle, which is followed by a longer descending candle which completely engulfs the previous
time period’s trading range (refer chart – II): -

        the open of the second candle is higher than the previous day’s close; and

        The close of the second candle is lower than the previous day’s open.
                                                       Chart - II




Author Bio:

I am working as a technical analyst in one of the share market company which provide intraday tips, Mumbai share
market tips, stock tips, intraday nifty tips etc. Writing articles about the basic information about share market is one
of my interests.

				
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Description: Among the most important of candlestick reversal patterns for stock traders are the engulfing positions, which can be seen as the opposite of the harami positions.