Master The Art of Trading an Indispensable Guide to Investing by Lewis Daniels

Author:Lewis Daniels
Language: eng
Format: epub
Publisher: Heligo Books

The image here shows the circled green candle, in light grey, engulfing the smaller red candle, in dark grey.

The suggestion would be that the trend is likely to start a move up. The logic for this is simple: a lack of selling interest in the small red candle followed by bullish strength in the next large green candle, thus engulfing the smaller candle. The inverse would be true in an uptrend – a smaller green candle being consumed by a larger red candle. You would then expect the next move to be down.

A lot of single candles are regarded as candlestick formations. And truth be told, it’s all down to logic. What is the candle trying to tell you?

If you look at what is known as an inside bar, similar to the engulfing candle example – this time you are looking for a candle that has its body and wicks, smaller than the candle before it.

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