Earn $460 in 4 days with Bearish Engulfing candlestick and compound interest

Earn $460 in 4 days with Bearish Engulfing candlestick and compound interest
Earn $460 in 4 days with Bearish Engulfing candlestick and compound interest

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If everything has two opposite extremes, then trading is no exception. In trading, an increase represents optimism or a decrease represents fear. In the previous article, I have introduced the Bullish Engulfing candlestick pattern and how to trade effectively.

Next, I will introduce a candlestick pattern that is completely opposite to Bullish Engulfing. It’s the Bearish Engulfing candlestick pattern combined with Snowball capital (compound interest) management which has earned me $460 in 4 days. Let’s follow up to see the money-making process.

What is Bearish Engulfing?

Bearish Engulfing is a reliable candlestick pattern that signals a reversal from up to down. We can consider this a strong signal predicting the strength of the bears in the future.

What is Bearish Engulfing?

With the strength and decisiveness, the Bearish Engulfing candlestick pattern has the following characteristics:

First candlestick: is a bullish candlestick with a moderate body.

Second candlestick: is a bearish candlestick with a long body covering the entire first candlestick.

Notes:

  • If it appears at the end of an uptrend, the accuracy of the Bearish Engulfing pattern will be the highest.
  • The red bearish candlestick must have a body covering the whole previous green candle body or the previous green candle cluster.
  • The accuracy of the Bearish Engulfing candlestick pattern will be high when the first candle is with a small body.

Meaning of the Bearish Engulfing candlestick pattern

The Bearish Engulfing candlestick pattern appears on the chart announcing that the market is about to reverse from bullish to bearish. It brings about a sharp decline in the market when the sellers take part in and take control. Most of the experienced traders often open DOWN orders when they see a Bearish Engulfing candlestick pattern.

Meaning of the Bearish Engulfing candlestick pattern

As an important indicator showing a reversal from up to down, the following factors will increase the accuracy of the Bearish Engulfing pattern.

– The first bullish candlestick has a small body. And the next bearish candle has a very long body.

Explanation: After a long uptrend, a slight bullish candlestick shows that the buying force has weakened. At that time, the price cannot continue rising sharply or go higher when the buyers are about to join in the fun. The strength is shown by a bearish candlestick covering the whole previous candle or candlestick cluster.

– The Bearish Engulfing pattern appears after a long uptrend or after a sharp increase.

Explanation: We can see that after a long uptrend, the bulls are no longer optimistic about the market. Only a few left are trying to push the price up through a small-body bullish candlestick. By the time the resistance of the sellers is so strong that it completely overwhelms the buyers, a bearish candlestick appears. The sellers start to overwhelm and execute short sale orders, causing the market to plummet.

– The second bearish candlestick body is larger than one or more of the previous bullish candlesticks.

Explanation: Many indecisive small candlesticks represent the indecision of the market. When a bearish candlestick appears and clears up the bullish momentum, the market has been under control by the sellers.

– Bearish Engulfing candlestick pattern appears at the resistance zone.

Explanation: Resistance is the zone where the sellers are strong enough to stop the bullish momentum or reverse the price. If a Bearish Engulfing candlestick pattern appears, then opening a DOWN order is what successful traders do.

Combining the candlesticks of a bearish engulf candlestick pattern, we get a Shooting Star candlestick pattern.

When the price direction reverses from a slight increase to a sharp decline, it creates a special candlestick pattern preferred by traders called Shooting Star.

Bearish Engulfing candlestick pattern converted to Shooting Star candlestick

Why should you study the Bearish Engulfing candlestick pattern before trading?

To win any game, it’s important to understand the nature. Since then, you can smoothly implement effective and profitable strategies. When you enter the financial market, you are in a game that is not for the majority. It’s dangerous to invest in a risky market without any knowledge. So studying a candlestick pattern detailedly will help you make the right decisions in your investment.

Understand the nature of the Bearish Engulfing candlestick pattern

Trading principles

If you want to survive and thrive in the financial market you should set some principles. Without principles, you’re just a slave to emotions that is not good for trading.

Trading principles

– Only open DOWN orders when using the Bearish Engulfing candlestick pattern.

– Do not trade 60 minutes before and after breaking news release.

– Do not open too many orders at once. Only open one order for each appearance of the pattern.

– During trading, do not let other jobs interfere with your process.

Capital management method

The market’s movements do not follow any standard. It mainly follows the psychology of the crowd. So the appearance of candlestick patterns is also quite small. But in return, the high probability of accuracy is worth the time to wait. The use of the Snowball (compound interest) method brings rapid growth to your balance.

That is, you will accrue the principal and profit of the previous order to invest in the following one. Strictly control the order cycle. Do not open more than 4 orders a day.

Snowball capital management method

Review and analyze opened orders in Olymp Trade on 18-21/05/2020

Date 18/05/2020

Review on opened orders on 18/05/2020 in Olymp Trade

Why did not we open an order when the Bearish Engulfing candlestick pattern appeared in the previous period?

Answers: Because I did not feel the weakness of the buyers with that Bearish Engulfing pattern. At the same time, I did not feel the overwhelming of the sellers, so it was my choice to keep waiting.

Reasons for opening the 1st order: In a downtrend, there was a weak resistance of buyers with small rising candles. And then, a bearish candlestick appeared which decisively cleared the previous bullish momentum. It also penetrated the newly formed trough to go lower.

Opened a DOWN order when the Bearish Engulfing candlestick pattern was confirmed. The results were as expected when the price went lower. I received a profit of 82% of the investment.

Date 19/05/2020

Review on opened orders on 19/05/2020 using Bearish Engulfing candlestick pattern in Olymp Trade

Reasons for opening the 2nd order: The downtrend was stable. The price started to rise slightly, indicating that the buyers had already entered but not yet drastically. After those weak bullish candles, a bearish candlestick with a large body appeared and broke out of the price channel. It offered a continuation of the downtrend and created a good opportunity for traders to open DOWN orders.

Opened a DOWN order when the Bearish Engulfing candlestick pattern was confirmed. The results were as expected when the price went lower. I received a profit of 82% of the investment.

Date 20/05/2020

Review on opened orders on 20/05/2020 in Olymp Trade

Reasons for opening the 3rd order: The uptrend was stable. However, the upper tail created a resistance level that made the price impassable. At that resistance level, a standard Bearish Engulfing candlestick pattern appeared. I was confident enough to open a DOWN order predicting a reversal in the near future.

Opened a DOWN order when the Bearish Engulfing candlestick pattern was confirmed. The results were as expected when the price went lower. I received a profit of 70% of the investment.

Date 21/05/2020

Review on opened orders on 21/05/2020 in Olymp Trade

Reasons for opening the 4th order: The downtrend then turned into a sideways trend and formed a support zone. A Bearish Engulfing candlestick pattern appeared and penetrated the support zone, creating a downtrend. When the pattern was confirmed, it was also the time for the market to start decisively declining.

Opened a DOWN order when the Bearish Engulfing candlestick pattern was confirmed. The results were as expected when the price went lower. I received a profit of 82% of the investment.

One last word

Up to here, you have seen all my trading processes through the above presentation. Here, we take the development of every trader as the main motivation. Saying should go with proof. We describe the trading process through writing. We do not show our balance or withdrawals to lure traders. Because if you look at my transaction process, whether I am profitable or not, you can decide for yourself.

What you need to do is take your trading skills to the next level. Today should be better than yesterday. Do not look at the results of others but deny their efforts. As your knowledge and skills improve, your profit will sure come.

Every week, we share trading strategies using a high-precision candlestick pattern. You can acquire the knowledge to create your own strategy. This is what we want and need you to do to make your transaction better.

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Earn $460 in 4 days with Bearish Engulfing candlestick and compound interest
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