The Engulfing Candle Indicator is a forex technical analysis tool that comes in handy when you need engulfing bars recognized automatically. It simply relieves the hassle of looking for engulfing candlesticks and picking them manually.
What is an Engulfing Pattern?
As the name suggests, the engulfing pattern is one candlestick that completely engulfs the entire candlestick on its left. This can indicate a change in sentiment which may, in turn, be a sign of possible reversal in the trend momentum.
The engulfing pattern can be divided into two types: Bullish Engulfing Pattern and Bearish Engulfing Pattern. The Bullish Engulfing indicates that there is a high buying pressure on the market and that more buyers are putting their money than sellers. Bullish engulfing drives the price of currency pair further up. Similarly, the Bearish Engulfing indicates that there is high selling pressure on the market and that more sellers are putting their money than buyers. It makes the currency pair fall further down. Take a look at the picture below to learn how to distinguish these two types.
That Engulfing Candle Indicator is capable of recognizing both of the patterns. When one is recognized, it automatically marks a candle by an upward or downward arrow. As you can see, it is easy to use and both beginners and advanced forex traders can try the indicator.
The Engulfing Candle Indicator fits all kinds of timeframes and currency pairs. The default settings can be modified directly from the input tab.
Feel free to experiment with the settings and parameters to fit your personal preferences.
Engulfing indicator gives accurate signals on all timeframes, but it is better to use it on the higher timeframes, starting with the H1, since the higher the timeframe is used, the more accurate are the signals of candle patterns.
After the installation, your trading chart will appear as the following image:
The Engulfing Candle indicator is well worth adding to your trading collection but remember about having realistic expectations. Just like any other technical analysis tool, is not capable of providing accurate signals 100% of the time. Thus, this forex indicator provides false signals occasionally. Its performance will vary significantly depending on market conditions.