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Engulfing & Pinbar Candlestick Pattern

Big Idea: After understanding how to read a candle and its movement or behavior throughout the day, traders can look for a series of individual candles to help them gauge what the charts are telling them.
This is a picture of a bullish engulfing pattern and a bearish engulfing pattern. When the green candle forms next to a smaller red one, it is called bullish engulfing and mens that buyers may have stepped in with majority control of the market. The big red candle next to the smaller green candle shows that there may be some weakness in the market, and sellers may step in.
This picture shows bullish and bearish reversal pinbars. The green pinbar suggests that there will be a reversal to the upside as price rejects the lows. The red pinbar suggests that price was rejected at the highs and may be ready to start a reversal to the downside.
These candle patterns are called “three white soldiers” and “three black crows”. The green candles represent seller exhaustion and further upside is now expected. The three red candles suggest that buyers have been exhausted and price may move to the downside.

Key Takeaways

-The different patterns should be used in combination with other indicators (support, resistance, moving averages, etc.)

-All three patterns can indicate a potential reversal in the market

Resources

A1 Trading Company

A1 Trading Company is a financial services and media business founded in Atlanta, USA.
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