Trading Strategies with Bullish Patterns- Are you a stock trader looking to increase your profit opportunities? If so, you need to know the trading strategy with the bullish engulfing candlestick pattern. In this article, we will discuss what a bullish engulfing candlestick pattern is, how to recognize it, and how a trading strategy with a bullish engulfing candlestick pattern can increase your profit opportunities in stock trading.

Strategi Trading dengan Pola Bullish
Trading Strategies with Bullish Patterns

Table of Contents

 

What is a Bullish Engulfing Candlestick Pattern?

Before discussing trading strategies with bullish engulfing candlestick patterns, it is important to first know what the pattern is. A bullish engulfing candlestick pattern is a pattern that occurs on a candlestick chart. This pattern is formed when a bearish candlestick (black) is followed by a bullish candlestick (white) whose body covers the body of the previous bearish candlestick. A bullish engulfing candlestick pattern indicates a change in market sentiment from bearish to bullish. This happens because at first, the market is controlled by sellers who make prices fall. However, at the end of the trading period, the buyer managed to take control of the market and make the price rise.

How to Recognize Bullish Engulfing Candlestick Patterns

After knowing what a bullish engulfing candlestick pattern is, the next step is to recognize the pattern on the candlestick chart. Here's how to recognize a bullish engulfing candlestick pattern:


Pay attention to the previous bearish candlestick


A bullish engulfing candlestick pattern only occurs after a bearish candlestick. Therefore, pay attention to the previous bearish candlestick and make sure that the body is smaller than the body of the bullish candlestick that follows it.


Pay attention to the size of the bullish candlestick body


The body of the bullish candlestick that follows the previous bearish candlestick should be larger than the body of the bearish candlestick.


Watch for bullish candlestick shadows


The shadow on a bullish candlestick should not be too long. If the shadow is too long, it shows that the seller still has control of the market.


Pay attention to trading volume


The trading volume on a bullish candlestick should be higher than the trading volume on the previous bearish candlestick. This shows that more and more buyers are entering the market and making prices rise.

Trading Strategy with Bullish Engulfing Candlestick Pattern

Now that you know how to recognize a bullish engulfing candlestick pattern, you can use it to increase your profit opportunities in stock trading. Here is a trading strategy with a bullish engulfing candlestick pattern:


Buy stocks at the time of the formation of a bullish engulfing candlestick pattern


After recognizing the bullish engulfing candlestick pattern on the chart, you can buy the stock the next bullish candlestick to form. Make sure to place a stop loss order at the right level to limit losses if the price moves against your trading position.


Use confirmations from technical indicators


To strengthen trading signals, you can use confirmations from technical indicators such as moving averages or MACD. If the indicator shows a bullish signal at the time of the formation of a bullish engulfing candlestick pattern, then your profit opportunities are even greater.


Consider fundamental factors


In addition to technical factors, fundamental factors also need to be considered in stock trading. Make sure to choose stocks with good fundamentals and monitor the news related to the company.


Don't use this strategy too often


Although a trading strategy with a bullish engulfing candlestick pattern can increase profit opportunities, not all situations are suitable for this strategy. Be sure to combine this strategy with other strategies and don't use it too often.

Advantages and Disadvantages of Using a Trading Strategy with a Bullish Engulfing Candlestick Pattern

Before you use a trading strategy with a bullish engulfing candlestick pattern, it is necessary to know the advantages and disadvantages of this strategy.

Excess

Fairly accurate trading signals


A bullish engulfing candlestick pattern is formed after a bearish candlestick, which indicates a sell-off pressure. If the bullish candlestick that follows it has a larger body and a higher trading volume, then it indicates that there is quite strong buyer pressure. Therefore, the trading signals of the bullish engulfing candlestick pattern are quite accurate.

Increase profit opportunities


By utilizing trading signals from bullish engulfing candlestick patterns, you can increase your profit opportunities in stock trading.

Deficiency

Not suitable for all situations


Not all situations are suitable for using a trading strategy with a bullish engulfing candlestick pattern. Sometimes, this pattern only occurs as noise in the market and does not indicate any change in market sentiment.


Not 100% accurate


Although the trading signals of the bullish engulfing candlestick pattern are quite accurate, they are not 100% accurate. Therefore, it is necessary to pay attention to other factors such as fundamental factors and the use of technical indicators.

 Also Read : What is "Shooting Star" and How Can You Use It?

 

Get to know GIC, the trusted trading platform and market maker in Indonesia!

Not familiar with GIC? Let's get acquainted. Unlike other conventional brokerage firms, GIC through the GICTrade platform provides a solution for traders who do not want to be charged with high trading fees. GICTrade is a peer-to-peer trading platform that brings together traders and market makers.


So, what is special about GICTrade? As a platform that brings together traders and market makers, you as a potential customer can certainly choose between the two, namely becoming a trader or a market maker.

 

GICTrade's role as a transaction venue provider can minimize costs and help maximize profits for traders and market makers as well as create a fair transaction atmosphere and results.

Register here to get maximum trading profits, so it's a profitable opportunity!


FAQ

1. Is the bullish engulfing candlestick pattern only happening on stock charts?

No, bullish engulfing candlestick patterns can also occur on forex or commodity charts.

2. What is the difference between a bullish engulfing candlestick pattern and a bearish engulfing candlestick pattern?

A bullish engulfing candlestick pattern is formed after a bearish candlestick, while a bearish engulfing candlestick pattern is formed after a bullish candlestick.

3. Is a trading strategy with a bullish engulfing candlestick pattern suitable for beginner traders?

Yes, this strategy is suitable for beginner traders because the trading signals are quite clear and can be easily identified on candlestick charts.

4. Should you buy stocks at the time of the formation of a bullish engulfing candlestick pattern

No, although the bullish engulfing candlestick pattern indicates strong buyer pressure, it is necessary to pay attention to other factors such as fundamental factors and the use of technical indicators to strengthen trading signals.

5. How long does it take to understand and master a trading strategy with a bullish engulfing candlestick pattern?

The time it takes to understand and master this strategy varies for each individual. However, by looking at and observing candlestick charts frequently, your understanding will be better.

6. Can a trading strategy with a bullish engulfing candlestick pattern be used in a short timeframe?

Yes, this strategy can be used in short timeframes such as day trading or swing trading.

Conclusion

A trading strategy with a bullish engulfing candlestick pattern can be the right choice to increase profit opportunities in stock trading. However, keep in mind that this strategy is not 100% accurate and is not suitable for all situations. It is important to pay attention to fundamental factors and the use of technical indicators to amplify trading signals. Also, don't use this strategy too often and always combine it with other strategies to minimize risk. Hopefully this article is useful for those of you who want to use a trading strategy with a bullish engulfing candlestick pattern.