just a couple of things on engulfing candles, youll find that they work a lot better when you add confluence to the equation, engulfing candles on thier own can and will lose you money. rather look for engulfing candles at support/resistance with overbought/oversold signal levels ,the probability of it then reversing are much higher, you now have 3 areas of confluence instead of just an engulfing candle. be careful of what is called the last engulfing top or bottom candle that act as a continuation pattern more often than not, choose youre weapons carefully when doing battle with the market.
Agreed Asylum, nothing in isolation. But look at engulfing candle on VODACOM daily chart on 14 January. Momentum(Stochastic 14,3,3),resistance and engulfing candle all made a perfect setup for a long trade BUT VODACOM continued the downtrend.So now as Simon explained in the presentation, we tweak the system ,add another indicator or remove the offending indicator.Becomes complicated, so engulfing candle and 2 moving averages is simple enough with a stop loss in place. Preston, if you bought, I hope you had a stop loss in place.
yes but that engulfing candle failed to close above resistance, now if your trading daily charts you need to look at the weekly chart and you will see that failed to break above resistance and that should have been a warning sign, you cant trade just using 1 time frame, daily looked great, but the weekly chart gave a different outlook, omo.