Engulfing candlestick pattern – How to confirm and trade it in IQ Option

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Engulfing candlestick pattern - How to confirm and trade it in IQ Option
Engulfing candlestick pattern - How to confirm and trade it in IQ Option

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This is one of the most popular reversal signals when using Japanese candlesticks. Engulfing candlestick pattern is undoubtedly trusted by traders with a high probability of accuracy. In this article, I will show you how to confirm and trade options in IQ Option with Engulfing candlestick pattern.

What is Engulfing candlestick pattern?

Engulfing candlestick pattern is created by a candlestick that engulfed all previous candlestick price attempts. It also signals a trend reversal. This candlestick is called Engulfing candlestick.

Furthermore, Engulfing candlestick is usually long that covers the entire previous candlestick. The color of Engulfing candlesticks is a signal to forecast the market trend. If it is green, an uptrend is incoming. If it is red, a downtrend is about to come.

What is Engulfing candlestick pattern?
What is Engulfing candlestick pattern?

Engulfing candlestick pattern has 2 forms

Bullish Engulfing candlestick

Bullish Engulfing candlestick is a pattern that usually appears at the end of a downtrend. This is a strong bullish candlestick. Bullish Engulfing candlestick covers the whole previous bearish candlestick. Following, the trend is about to reverse from downward to upward.

Bullish Engulfing candlestick
Bullish Engulfing candlestick

In general, a basic Bullish Engulfing candlestick pattern consists of 2 candlesticks.

• The first candlestick is a red bullish candlestick.

• The second candlestick is a green one that rises sharply and covers the first candlestick.

Bullish Engulfing candlestick
Bullish Engulfing candlestick

A complex Bullish Engulfing candlestick pattern can be formed by more candlesticks. However, it always ends with a green engulfing candlestick increasing sharply and covering the previous candlesticks. In this case, it is a very strong signal for you to open a HIGHER option in IQ Option.

Bullish Engulfing candlestick pattern
Bullish Engulfing candlestick pattern

Bearish Engulfing candlestick

Contrary to Bullish Engulfing, Bearish Engulfing candlestick pattern usually appears at the end of an uptrend. The market is expected to decrease in the near future. Moreover, Bearish Engulfing candlestick is a long red candlestick that covers the whole previous green candlestick.

Bearish Engulfing
Bearish Engulfing

Simple Bearish Engulfing pattern consists of 2 candlesticks.

• The first candlestick is a green bullish candlestick.

• The second candlestick is a strong bearish one (red and long) covering the previous green candlestick.

Bearish Engulfing candlestick
Bearish Engulfing candlestick

A complete Bearish Engulfing candlestick pattern can be created by multiple candlesticks. It also ends with a red and long Bearish Engulfing candlestick covering the previous candlesticks. In IQ Option, you can open LOWER options when the Bearish Engulfing pattern appears.

Bearish Engulfing candlestick pattern
Bearish Engulfing candlestick pattern

How to trade IQ Option effectively with Engulfing candlestick pattern

This is one of the extremely reliable signals you can use to buy options. Therefore, focus on the color of the Engulfing candlestick. If Engulfing is green, buy HIGHER. And in case it’s red, buy LOWER.

Method 1: Engulfing candlestick pattern combines with Support and resistance

Requirements: Japanese 5-minutes candlestick pattern. In addition, the expiration time is from 10 minutes or more.

Trading method:

HIGHER = Bullish Engulfing + Support.

Explanation: Bullish Engulfing candlestick pattern is a signal that the price will increase. When combining with the support level, it can predict an uptrend precisely. Thus, you can open a HIGHER option.

Bullish Engulfing candlestick pattern combines with Support
Bullish Engulfing candlestick pattern combines with Support

LOWER = Bearish Engulfing + Resistance.

Bearish Engulfing candlestick pattern combines with Resistance
Bearish Engulfing candlestick pattern combines with Resistance

Method 2: Engulfing candlestick pattern works with SMA indicator

Requirements: Japanese 5-minute candlestick pattern + SMA30 indicator. The expiration time is 15 minutes or more.

Trading method:

HIGHER = The price moves down and touches SMA30 + Bullish Engulfing candlestick pattern.

Explanation: When the price is above SMA30 => It is an uptrend. When it hits SMA30 and creates a Bullish Engulfing candlestick pattern. As a result, there is a high probability that it will rebound to resume the trend. Hence, open HIGHER options.

Bullish Engulfing candlestick pattern works with SMA
Bullish Engulfing candlestick pattern works with SMA

LOWER = Price moves up and touches SMA30 + Bearish Engulfing candlestick pattern

Bearish Engulfing candlestick pattern works with SMA
Bearish Engulfing candlestick pattern works with SMA

In summary

Iqtradingpro will have more articles about SMA and Engulfing reversal candlestick pattern strategy. This is a standard trading options technique with trend and signals. If you find this article helpful, please leave a comment below. Thank you so much.

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Engulfing candlestick pattern – How to confirm and trade it in IQ Option
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