Engulfing Candlestick Strategy

This pattern signalizes about reversal of the price movement. We see this signal after a candlestick has appeared and its body is bigger than the previous reversal candlestick. This is an engulfing candlestick. When this signal appears we should be prepared and see where the next candlestick will move. If the candlestick has the same direction as an engulfing pattern you can open a deal after its closing.


A procedure after a signal appearance:

1) See a bigger candlestick in opposite direction to a previous candlestick;

2) Wait for appearance of a new candlestick confirming a direction;

3) Open a deal in the engulfing direction after closing a new candlestick.

Buying a put after a bearish engulfing pattern

The bigger engulfing candlestick is the stronger price movement will be after reversal. In this case if you have some profit you can risk and buy an option after closing a strong engulfing candlestick. But remember you should always wait for confirmation of candlestick signals.