What Is Forex Engulfing Pattern

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The largest financial market in the world is forex and also known as FX. It stands for foreign exchange market. If you are a starter in forex marker then you will face a lot of confusions. It is also known as over the counter (OTC) market. You can imagine this as a stock market. Only the difference is that instead of shares here you are opting for currencies of different countries. Like for example if you are planning to buy British pound (GBP), then that means you are buying a share in the British economy. That means you are betting that British economy is going good and as the time goes you will see a lot of profits done by this and to gain profits you will sell back those shares to the market. Forex also represents the country’s economy and financial conditions. Now let’s talk about the engulfing candlestick pattern. It is a kind of strategies people will make use of to gain profits in the market. It is simple to detect and provides a way to enter in the trend. Engulfing candle and directional movement index is a powerful combination to gain profits in the forex market. Most of the successful traders make use of engulfing pattern for day trading. Engulfing pattern charts provides highly visual chart style.

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There are two types of engulfing candle: BULLISH engulfing candle and BEARISH engulfing candle. The first one is noted by a bullish candle where the body open and close engulfs the previous candle’s body. And the bearish engulfing pattern is noted by a bearish candle whose body engulfs the previous candle’s body. When Engulfing patterns are formed near the tops or bottoms can indicate a short term difference in the sentiment. Now let’s take one example:

Forex Engulfing Pattern

The above graphs tell about the bullish engulfing pattern (1 hour chat). The Bullish engulfing pattern is easy to identify. And if you will look closely then you will also find the bearish engulfing pattern. The main motto of this strategy is to isolate the trend and this pattern does not have any time of completion and there is no specific target. Before stepping inside the foreign exchange market, you should have all the necessary information and knowledge. So at last I would advise everyone first to gather information and then start trading. Because once you start trading there is no stepping back and market trading world is totally different from the normal world.

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