Candlestick patterns are one of the most powerful trading concepts, they are simple, easy to identify, and very profitable setups, a research has confirmed that candlestick patterns have a high predictive value and can produce positive results.

I have personally traded candlestick patterns for more than 7 years; I can’t really switch to another method, because I tried thousands of strategies and trading methods with no results.

I’m not going to introduce you to a holy grail, this trading system works, but be prepared to lose some trades, losing is a part of this game, if you are looking for a 100% winning system, I highly recommend you stop trading and go look for another business.

Candlestick patterns are the language of the market, imagine you are living in a foreign country, and you don’t speak the language.

How could you live if you can’t even say a word? It’s tough right???The same thing when it comes to trading.

If you know how to read candlestick patterns the right way, you will be able to understand what these patterns tell you about the market dynamics and the trader’s behavior.

This skill will help you better enter and exit the market at the right time.

In other words, this will help you act differently in the market and make money following the smart guy’s footprints.

The candlestick patterns that I’m going to show you here are the most important patterns that you will find in the market. I’m not going to show you how to trade them, because this will be explained in detail with each candlestick pattern.

What I want you to do is to focus on the anatomy of the pattern and the psychology behind its formation, because this will help you get the skill of identifying easily any pattern you find in the market and understand what it tells you to do next.

If you can get this skill, you will be ready to understand and master the trading strategies and tactics that i’m going to tell you now.

The engulfing bar candlestick pattern

The Engulfing bar as it states in its title is formed when it fully engulfs the previous candle. The engulfing bar can engulf more than one previous candle, but to be considered an engulfing bar, at least one candle must be fully consumed.

The bearish engulfing is one of the most important candlestick patterns.

This candlestick pattern consists of two bodies:

The first body is smaller than the second one, in other words, the second body engulfs the previous one. Refer the image below:


This is how a bearish engulfing bar pattern looks like on your charts, this candlestick pattern gives us valuable information about bulls and bears in the market.

In the case of a bearish engulfing bar, this pattern tells us that sellers are in control of the market.

When this pattern occurs at the end of an uptrend, this indicates that buyers are engulfed by sellers which signals a trend reversal.

Refer the image below:


As you can see when this price action pattern occurs in an uptrend, we can anticipate a trend reversal because buyers are not still in control of the market, and sellers are trying to push the market to go down.

You can’t trade any bearish candlestick pattern you find on your chart; you will need other technical tools to confirm your entries.

We will talk about this in detail in the next chapters. Right now, I just want you to open your charts and try to identify all bearish candlestick patterns that you find.

The bullish engulfing bar pattern

The bullish engulfing bar consists of two candlesticks, the first one is the small body, and the second is the engulfing candle,

Refer the illustration below:


The bullish engulfing bar pattern tells us that the market is no longer under control of sellers, and buyers will take control of the market.

When a bullish engulfing candle forms in the context of an uptrend, it
indicates a continuation signal.

When a bullish engulfing candle forms at the end of a downtrend, the
reversal is much more powerful as it represents a capitulation bottom.

Refer the image below:


The example above shows us clearly how the market changes direction after the formation of a bullish engulfing bar pattern.

The smaller body that represents the selling power was covered by the second body that represents the buying power.

The color of the bodies is not important. What’s important is that the smaller one is totally engulfed by the second candlestick.

Don’t try to trade the market using this price action setup alone, because you will need other factors of confluence to decide whether the pattern is worth trading or not, i will talk about this in the next chapters.


What I want you to do now is to get the skill of identifying bearish and bullish engulfing bars on your charts. This is the most important step for the moment. 

Stay Tuned on Telegram @TradeKeyClub to Learn and Trade with me.