What To Know Most Is: 'Engulfing'

Engulfing & Its Types

Engulfing: When one type of trend candle engulfs the other trend candle and makes that opposite trend its own. This process of changing the trend by engulfing one trend candle from other is known as Engulfing in Stock Market.

Let's make it clear to you by examples: 

1. Bullish Engulfing:

Bullish Engulfing is a trend reversal in which there is a hidden signal of the market going Bullish. When a red candle is being engulfed by a green candle then we see a bullish engulfing. 

But we can not assume the market to be bullish only on these two sticks, we have to make sure that the previous candles were also showing some good news for us. If the previous candles were small red then it is going to be a boom with a bullish signal in it.

Stop loss: Green Candle's Low

Target: Wait for the next trend signal. It varies on our candlestick's duration also.

For Intraday it can be 15-30 minutes or 1 hour.

For Options, it can be 1-5 minutes.

2. Bearish Engulfing: 

The Bearish Engulfing is vice-versa of the Bullish one. In the bearish engulfing, a small green candle is being engulfed by a large red candle. 

Now as same as the bullish engulfing, we should also watch the previous candles for confirmation of the bearish engulfing. Now, if the previous candles formed were green in colour and small in size then it could be a strong bearish signal. Well, it is not a one-hand game, we can also bear a loss in the stock market. So, be careful and be attentive while trading. 

Stop loss: Red Candle's High

Target: Wait for the next trend signal. 

For Intraday, wait for 10-15-30 minutes.

For Options, wait for 1-2-5 minutes.

Thank You,