Trading Articles

Candlestick Formation: Engulfing Pattern

The Engulfing pattern is a strong candlestick formation, which is used to confirm many signals and chart patterns.
In this article you will learn how it is identified and used in trading.

Structure
The Engulfing pattern is constructed of two bars:

  1. Bullish Engulfing Pattern is constructed of two bars, which the second one opened below the first, and closed above - engulfing the first candle

Indicators: How To Trade with Bollinger Bands

Developed by John Bollinger, The Bollinger Bands is one of the most popular technical indicators. In this indicator I will describe its strengths and weeknesses and show you the ways to use it.

Calculation
The Bollinger Bands consist of 3 bands:

  • Middle Band - A 20-period Simple Moving Average of close price.
  • Upper Band - Middle Band, plus two standard deviations.
  • Lower Band - Middle Band, substracted two standard deviations.

Candlestick Formation: Evening Star

The Evening Star is a strong reversal pattern that is composed of the Doji candlestick and two candles. It is the perfect reversal pattern. Its first candle is a full bullish candle, followed by a Doji that signals indecision, and the last candle signals the final reversal - full bearish candle.

Examples of the Evening Star in trading:

Candlestick Formation: Doji

The Doji is an indecision candlestick formation, which can transform into a Reversal formation if accompanied by confirmation candles.

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