Engulfing strategies

The Engulfing Bullish pattern is generally well-known and its description can be found almost everywhere. Therefore just to summarize shortly, this looks as follows:

Engulfing bullish

This mean that the body of the second candle covers the body of the first candle. Besides, the second day opens below the close of the first day, and the second day closes above the open of the first day. In addition it is also better if the formation occurs after a downtrend.

The performance of this pattern can be easily done by backtesting, since coding of this structure in a computational programme is not as challenging as for e.g. chart patterns such as a double bottom.

The results of backtesting are presented here.

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