The Engulfing Pattern For Swing Traders by Omar Ait Hellal and Gerald Meyer
This swing trading strategy can be applied to currency markets, common stocks, and exchange traded funds that track commodities and track indexes.
ost swing traders are in and out of their positions in one to five days. They tend to rely on common trading patterns. In particular, swing traders often look for certain simple candlestick patterns that are indicative of a reversal of the prevailing trend. Candlestick bars consist of a body and an upper and lower shadow. The body is determined by the open and close, and the color depicts the direction, usually green for a higher close and red for a lower close. It is a widely held belief that an engulfing candle is a reliable predictor of reversals. Is it? Letís examine the engulfing pattern across markets over a period of 11 years to find out.