When it comes to trading, recognizing candlestick patterns can make all the difference in your strategy. One such pattern that many traders overlook is the Hidden Engulfing Candlestick Pattern. This guide will break down how to identify it and how it can enhance your trading decisions.
The Hidden Engulfing Pattern can be selected for either a Two-Bar or Three-Bar break, making it versatile for different trading styles.
Two Bars Break Example
In a Two Bars Break scenario, we look for a bearish candle's open to be broken by the close of a bullish candle. This bullish candle should ideally have at least one harami (also known as a pregnant candle) in between the bearish and bullish candles. This interplay can signal a potential reversal or a continuation of the trend.
Three Bars Break Example
Now, let’s step it up to the Three Bars Break example. Here, you’ll notice a similar structure, but with an added twist. The bearish candle's open is again broken by the close of a bullish candle, but this time, we require at least two haramis in between the bearish and bullish candles. This can offer a stronger indication of a potential market shift.
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