The pattern in the image is a bullish engulfing candlestick pattern. This pattern is formed when a bearish candlestick is completely engulfed by a bullish candlestick. This is a bullish reversal pattern, which means that it suggests that the price is likely to move upwards.
Here is a more detailed explanation of the pattern:
Bearish candlestick: The first candlestick in the pattern is a bearish candlestick. This means that the close of the candlestick is lower than the open.
Bullish candlestick: The second candlestick in the pattern is a bullish candlestick. This means that the close of the candlestick is higher than the open.
Engulfing: The bullish candlestick completely engulfs the bearish candlestick. This means that the high of the bullish candlestick is higher than the high of the bearish candlestick, and the low of the bullish candlestick is lower than the low of the bearish candlestick.
Interpretation of the pattern:
The bullish engulfing candlestick pattern is a bullish reversal pattern. This means that it suggests that the price is likely to move upwards. The pattern is formed when buyers take control of the market and push the price up above the recent bearish trend.
How to trade the pattern:
There are a few different ways to trade the bullish engulfing candlestick pattern. One common approach is to enter a long position after the bullish candlestick closes. This is because the pattern suggests that the price is likely to continue moving upwards.
Another approach is to wait for confirmation before entering a trade. This confirmation could come in the form of a break above a key resistance level or a continuation pattern.
Risk management:
As with all trading strategies, it is important to use proper risk management when trading the bullish engulfing candlestick pattern. This means placing a stop-loss order below the low of the bearish candlestick. This will limit your losses if the price does not move upwards as expected.
