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Engulfing

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  • Do you find this strategy viable and make sense
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  • #1
  • First Post: Edited 9:57pm May 11, 2019 9:34pm | Edited 9:57pm
Dear All
I am a 59 retiree although I have a full time job at this moment. I have been trading forex for almost a decade and 3/4 of this decade was not making money. However, I have come to understand that most trades using indicators are a total waste of time. It is lagging, it follow price. When price goes up the indicator goes up and vice versa.

I have been using engulfing bar as a reversal pattern and using semofor 3 (it repaints and it is a good thing not bad) as a filter to let me see the swing points. The engulfing bar must strictly followed by a confirmation bar before entry. This confirmation bar is a must to ensure that there is follow through after the engulfing. A picture will let you see what I mean. This technique is not my own and if you felt I plagiarised your work, let me know. I will stop this thread.
First some house rules:-
1) strictly no criticism or bullying with ego statements, abusive, or intimidating words. If you don't like, just get out
2) I do not need to show you my trading result as I am under no obligation
3) no deviation from the technique use here. This thread started with the aim for interested parties to make constructive contribution and make it better
4) constructive opinion and questions are encouraged but please understand that I am a working person not full time trader
5) prefer to have lots of encouragements with fellow traders and no harassment (I repeat)

This technique is easy to understand with very minimal indicators which complicates.
thank you
Attached Image (click to enlarge)
Click to Enlarge Name: CHFJPYH4.png Size: 95 KB
  • #2
  • Edited 10:05pm May 11, 2019 9:46pm | Edited 10:05pm
Dear all
possible trade on Monday 13/5/2019. Trade at your own risk. This is not 4 hour tf but daily. So trade r:r at your discretion.

Thank you
Attached Image (click to enlarge)
Click to Enlarge Name: CHFJPYDaily.png Size: 82 KB
  • #3
  • May 12, 2019 3:20am May 12, 2019 3:20am
Quoting josephkee
Dear All I am a 59 retiree although I have a full time job at this moment. I have been trading forex for almost a decade and 3/4 of this decade was not making money. However, I have come to understand that most trades using indicators are a total waste of time. It is lagging, it follow price. When price goes up the indicator goes up and vice versa. I have been using engulfing bar as a reversal pattern and using semofor 3 (it repaints and it is a good thing not bad) as a filter to let me see the swing points. The engulfing bar must strictly followed...
Hi josephkee,
Subscribed. It would be helpful if you could upload your 2 indicators and template so that everybody can be on the same page.
  • #4
  • Edited 4:00am May 12, 2019 3:43am | Edited 4:00am
Hi
this is the semafor. The rest are just simple demand and supply zone which are not necessary in my view. The MA is simple ema 8 and ema 3o again not necessary. You can use your own resistance and support level.
By the way, I upload another chart to show you something.
Since it is a downward trend, do you see any buliish engulfing followed by a confirmation (that close above the high of any bullish engulfing) and yet the trend continues to go down ( a fake bullish engulfing). The answer is no, you cannot find one bullish engulfing with a confirmation. I do not cherry pick chart to explain my point. It is all over the chart. Please do your own back test and confirm result and if you are convinced then we can let this discussion began.

Is this technique perfect and 100% fail proof? It is not and it will have occasional losses like any strategy.
Hope it helps.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSDH4.png Size: 68 KB
Attached File(s)
File Type: mq4 3_Level_ZZ_Semafor.mq4   8 KB | 1,173 downloads
  • #5
  • May 12, 2019 3:48am May 12, 2019 3:48am
Quoting josephkee
Hi this is the semafor. The rest are just simple demand and supply zone which are not necessary in my view. The MA is simple ema 8 and ema 3o again not necessary. You can use your own resistance and support level. Hope it helps. {file}
  • #6
  • May 12, 2019 4:24am May 12, 2019 4:24am
Hey, I got a question about this pattern ....
If the engulfing pattern happens in 4H chart, should we stick to 4H chart or switching to ... Let say ... 15M chart just for short-term confirmation ?,
Vice versa, if the engulfing happen in 15M chart, should we look at 4H for long-term confirmation
  • #7
  • May 12, 2019 4:27am May 12, 2019 4:27am
Hi
I don't do that and I am quite successful just looking at one TF. Not to complicate matters. However, When I trade daily, and before I long, I find that when I switch to weekly to see the stochastic, it usually is below 30 level and going up. That's just my preference.
thank you
  • #8
  • May 12, 2019 5:54am May 12, 2019 5:54am
Hi
the pattern keeps repeating. Please do back test and find out for yourself if you agree.
Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYH4.png Size: 88 KB
  • #9
  • May 12, 2019 6:02am May 12, 2019 6:02am
Quoting josephkee
Dear all possible trade on Monday 13/5/2019. Trade at your own risk. This is not 4 hour tf but daily. So trade r:r at your discretion. Thank you {image}
this is downtrend for me? what is your usual stoploss and take profit area if you were to enter this one?

I trade engulfing for sometime but i never thought of the confirmation bar. Might be something useful here.
  • #10
  • May 12, 2019 6:20am May 12, 2019 6:20am
Quoting CrocodileRex
{quote} this is downtrend for me? what is your usual stoploss and take profit area if you were to enter this one? I trade engulfing for sometime but i never thought of the confirmation bar. Might be something useful here.
Hi
Monday trade is intended to go long not short. Please see the red line in that chart to see my TP and SL.

In fact this confirmation bar is not my idea as one author had it in one of the website. Some less conservative traders will enter when the confirmation bar breaks the high or low of EB but I normally want to see it closed above the high or below the low.

Just to adjust our expectation a bit. I show you this chart when a EB with confirmation failed (it does fail sometimes) and one that earns 200 pips.
Thank you
Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYDaily.png Size: 81 KB
  • #11
  • May 12, 2019 6:32am May 12, 2019 6:32am
Hi,
what's your excact understanding of an engulfing candle?
High/Low of the previous candle is engulfed by High/Low or only the body of the candle is engulfed?
  • #12
  • May 12, 2019 6:38am May 12, 2019 6:38am
Quoting iwjw
Hi, what's your excact understanding of an engulfing candle? High/Low of the previous candle is engulfed by High/Low or only the body of the candle is engulfed?
Hi
it depends. I would normally be conservative and insist that the body engulfs the previous bar. Two or three bars can also be engulfing if it combines to cover the body of the previous. Again this is not my idea. It is taken from website. See example
Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYH4 1.png Size: 89 KB
  • #13
  • May 12, 2019 6:51am May 12, 2019 6:51am
Quoting josephkee
{quote} Hi it depends. I would normally be conservative and insist that the body engulfs the previous bar. Two or three bars can also be engulfing if it combines to cover the body of the previous. Again this is not my idea. It is taken from website. See example {image}
Doesn't make it easy
Here's an indicator with engulfing defined on basis high/low high/low
The arrow appears when the setup is confirmed (there you would take the trade)
Attached File(s)
File Type: mq4 _engulfing_arrows.mq4   2 KB | 2,121 downloads
  • #14
  • May 12, 2019 6:56am May 12, 2019 6:56am
Quoting iwjw
{quote} Doesn't make it easy Here's an indicator with engulfing defined on basis high/low high/low The arrow appears when the setup is confirmed (there you would take the trade) {file}
I quote from website which I cannot remember the link.

Engulfing Confirmation

The confirmation of the Engulfing candles comes with the candle after the pattern. It needs to break the body level of the engulfing candle to confirm the validity of the pattern.
A bullish pattern continues only with a third candle (bullish), which breaks the body of the engulfing candle . A bearish pattern continues with a third candle (bearish), which breaks the body of the engulfing downwards. See picture to see the confirmation
Attached File(s)
File Type: docx valid engulfing pic (1).docx   19 KB | 1,449 downloads
  • #15
  • May 12, 2019 3:03pm May 12, 2019 3:03pm
So once you have a confirming candle you go long or short on the next candles open or do you put a pending order waiting for the high or the low of the confirmation candle to be triggered? Thanks
  • #16
  • Edited 4:56pm May 12, 2019 4:15pm | Edited 4:56pm
Quoting josephkee
Dear All I am a 59 retiree although I have a full time job at this moment. I have been trading forex for almost a decade and 3/4 of this decade was not making money. However, I have come to understand that most trades using indicators are a total waste of time. It is lagging, it follow price. When price goes up the indicator goes up and vice versa. I have been using engulfing bar as a reversal pattern and using semofor 3 (it repaints and it is a good thing not bad) as a filter to let me see the swing points. The engulfing bar must strictly followed...
hi sir, you have a great system. I use some engulfing style but with different set for the recent ( around 2 months). I mean, everytime I see engulfing, I just pull fibo on the engulfing candle and set limit on 0.88% (1) and 0.618% (2), my stop would be in -0.236% (minus). tried it on 1h - D tf.

since I don't have enough patience, im still figuring on the lower tf with this style, but it seem too much whipsaw (15m - 5m).

well, thats some story of my style, i'll keep an eye to see what happen next.

#fries

edit: i just read back post 1, i never thought that little confirmation bar clues, sh*t happen . time to re-build old information in my head...
Beyond The Gray Sky
  • #17
  • May 12, 2019 4:54pm May 12, 2019 4:54pm
Quoting sheppy
So once you have a confirming candle you go long or short on the next candles open or do you put a pending order waiting for the high or the low of the confirmation candle to be triggered? Thanks
Hi Sheppy. Either way . Wait for confirmation to close. Thats my conserbative approach.
  • #18
  • May 13, 2019 3:52pm May 13, 2019 3:52pm
  •  dot0
  • | Joined Sep 2012 | Status: I pity the fool that fails to laugh | 368 Posts
4h eu just comited engulfment...
c'mon baby, daddy needs brand new clogs...
  • #19
  • May 13, 2019 11:13pm May 13, 2019 11:13pm
Quoting josephkee
Dear all possible trade on Monday 13/5/2019. Trade at your own risk. This is not 4 hour tf but daily. So trade r:r at your discretion. Thank you {image}
hi Joseph, that possible trade on CHF/JPY........it will meet strong resistance at around 109.30 and might not reach your TP at 110.08 - more so because the pair is in a downtrend...........what makes you chose this TP at 110.08?........r:r?
  • #20
  • May 14, 2019 12:45am May 14, 2019 12:45am
Quoting josephkee
{quote} Hi it depends. I would normally be conservative and insist that the body engulfs the previous bar. Two or three bars can also be engulfing if it combines to cover the body of the previous. Again this is not my idea. It is taken from website. See example {image}
hi again Joseph......... if you trade this pattern (2-3 bars to cover a previous bar), then you really take any trade in the new direction, not just a normal engulfing pattern.......nothing wrong with that........just to clarify.
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