Bullish engulfing candlestick pattern is made up of 2 candlestick and usually appears at the end of the downtrend then bulls enter into the market and take the price higher.
It is formed by two candles, the second candlestick engulfing the first candlestick. The first candle is a bearish candle that indicates the continuation of the downtrend.
The second candlestick is a long bullish candle that completely engulfs the first candle
and show that the bulls are back in the market.
Traders can enter a long position if next day bullish candle is formed and can place a stop - loss at the low of the second candle.
*Important Points
1. The Second candle must engulf the body of the previous candle. (It is better if wicks of the previous candle are also engulfed by the second candle)
2. The previous trend must be a down trend.
3. The stochastic oscillator should be in an oversold conditions.
4. The Volume of the second candle should be higher than the volume of the previous 2 candles.
5. Take the buy position above the high of the second candle .
6. Keep the stop loss below the low of the green candle.
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