Candlestick charting is the de-facto trading format today on most platforms. Understanding candle charts is of essential importance. Are you a beginner forex trader? No trading strategy are you taking yet? And you want to build a trading strategy? We recommend taking the candlestick pattern forex trading strategies for beginners.

Unless you remove all of your charts you end up with a basic candlestick chart. Unlike candlestick charts Candlestick charts contain time elements. The candlestick price shows you exactly what prices do at one point in time. The chart is composed of several individual candlesticks with different shapes, the candlesticks being different in each one. The bars above and below the body are called shadows. In Forex jargon they are also called ‘wicks’. For more information about charts or chart patterns see our step-by-step trading guide HERE.

This Forex Trading Guide for Beginners will give you everything you will need to start trading forex. The successful use of Forex trading strategies can make money in a comparatively short space of time. Once you have good trading knowledge and confidence you can continue trading forex freely. If you do trading forex there you will know about the benefits, disadvantages and advantages.

What is the candlestick pattern?

Candlestick is a technical analyzing tool. In the last eighteen century it was first used in Japan, for this it is also called ‘Japanese candlestick”. A Japanese rice trader named Munehisa Homma (1716-1803) invented it and applied it to his rice trading. He had observed the buyer-seller’s psychological activities and perception in the rice market and gotten some psychological patterns. As per this pattern, he applied it to his rice trading and achieved radical trading success. He became a very big rich person. Like this way, Homma invented the candlestick pattern trading concept in the world.

The western world first learned about candlestick patterns in the year 1989 . A trader’s name is, steve Nison, who first has imposed it. He is also called, father and author of the candlestick. He has written several books on candlesticks. Like, “Beyond candlesticks: New Japanese charting techniques Revealed “.

What is the definition of a candlestick pattern? Candlestick pattern is the graphical formation in the market price chart, the maximum pattern looks like a candle. The pattern is built with four price movement data, they are price- open, close, high, low, in a certain period of time. The candlestick patterns which are visualized in the market price chart all are pre-identified and pre-selective names full.  Each candle pattern gives a certain type of future price movement guesses. A trader does trade as per the candlestick pattern’s signal.

 There are a lot of candlestick patterns that existed. It could be hundreds and hundreds. You should not need to learn and master up that entire pattern. But you must know some important and useful patterns. In this article, we only present some specific candlestick patterns for building a trading strategy. No discussion widely about candlestick patterns.

 See the picture of candlestick anatomy-

In that picture, we see the bullish candle pattern as red color and the bearish candle as black. The color could be any candlestick in the price chart. A Bull candle’s close price is higher than the open price. And bearish candle is when the close price is lower than the open price.

Candles stick forex trading strategies for beginners

Candlestick pattern trading strategies are so widely used and profitable in forex trading. You have to choose an effective and consistent fruitful pattern. We are now sharing some of very well known and proven useful candlestick pattern strategies-

Bearish engulfing candlestick pattern strategy

A very well-known and useful candlestick pattern is the Engulfing pattern. The bearish engulfing pattern is a dual candlestick pattern. It is built with two different candlestick patterns. The first candle is a bullish candle and the second is a bearish candle. The second bearish candle fully engulfed, overlapped, or covered the first bullish candle. It’s a reversal pattern. It occurs after an upward price movement. At the end of an uptrend. It makes the uptrend fall downward direction. It shows the market psychology is that the buying pressure has quitted and sellers get control of the market. So, the market might be going down. And traders can get an in-sell entry by this candlestick pattern’s sign

For a valid Bearish engulfing pattern, be confirm about some conditions:

• Bearish candlestick pattern is a pair of twice candles. The first candle is bullish and the second is bearish.
• In the bearish engulfing pattern, the second bearish candle must engulf or fully cover the total body (total length is best) of the first bullish candle. And the second bearish candle has to close under the last price of the first bullish candle.
•  After an upward price movement at the top label or end label, it has to occur. Always consider it as a bearish reversal pattern. And take the signal of a sell entry.
• The bearish candlestick pattern occurs as a swing high point is the best for action.

See the picture of the bearish Engulfing pattern. In this picture, we use a white color candle as a bullish and black candle for bearish-

What are you seeing in that picture? After a bullish or up movement of the market price, a bearish engulfing candle pattern has happened. First bullish candle full engulf by a second bearish candle in a swing high point. And the market price has gone down. It is a nice and valid bearish engulfing reversal setup. We give a full counter-trend reversal sell entry by a bearish engulfing pattern example in that picture. You get this sell entry in a resistance label with a swing high point by bearish engulfing pattern. You must take this sell entry with a resistance label for better results.

But you always trade any strategy within the trend. Because trend trading is the very high winning result. So, trade the bearish engulfing candlestick pattern within the downtrend is a very high probabilities trade. Remember bearish engulfing is sell entry bias strategy, so always its appropriate trend is a downtrend. In a downtrend at the resistance label, you get entry with the bearish engulfing pattern.

See the picture of a bearish engulfing in a downtrend at resistance label-

In the picture, there is a strong downtrend, and the price the first time has gone to lower, then it again starts to retrace back to upward move, and reach at the resistance label, at resistance a Bearish engulfing pattern has created. After that, the price fell down. It is a nice example of a sell entry in a prevailing downtrend at the resistance label.

BULLISH ENGULFING CANDLESTICK PATTERN STRATEGY

Bullish engulfing candlestick pattern also dual candle pattern. It is fully opposite of the Bearish Engulfing candlestick pattern. The first candle is bearish and the second candle is bullish. The second bullish candle engulfs or covered the first bearish candle’s total body or total length. It is a bullish reversal pattern. After a downtrend or market price downward movement, it occurs. It makes downward market prices in an upward direction. It stays at the end label or lower label of a downward price movement. This pattern gives a signal of a buy trade entry.

See the picture of the bullish engulfing pattern. In this picture, we use white color as bullish candle and black for bearish candle-

In the picture, we give a bullish reversal example of a Bullish Engulfing pattern. At the end of a downtrend, it has occurred. The first bearish candle is fully engulfed by the second bullish candle and after that price has gone up. But you must take this buy entry at the support label.

Another way you can trend trading is by bullish engulfing patterns. In a prevailing uptrend, you also trade with this candle pattern.

See the picture of that-

In the picture, the market is on an uptrend. Market first has gone to the top label and retraced back some downward at support label, then at the support label, a bullish engulfing pattern has created, after that market is again starting to go up.

Remember, it is a better bullish engulfing trade setup if it is created with the swing low point.  

How to set entry, stop loss, and take profit label

In a bearish engulfing pattern you take a sell entry after the closing price of the second bearish candle, another sell entry you can take after the last lower end of that bearish candle, you also take a sell entry at some retracement area of that candle. You set the stop-loss order some pips above the upper label of bearish engulfing pattern, you also set stop loss (sl) beyond the resistance label where the bearish engulfing pattern has occurred. Intake profit order for bearish engulfing patterns, you can take these several ways. But we suggest setting the take profit (tp) to the next support label.

In bullish Engulfing pattern you take buy entry at price label- after the closing of the second bullish candle, after heist upper label that candle, and at the retracement label of the candle. You set the stop-loss order for the bullish engulfing pattern with some pips under the label of the lower end of the bullish engulfing pattern. You also set it below the support label where the bullish engulfing has happened. Set the take profit label to the next resistance label.

Conclusion  

We recommend building forex trading strategies for beginners not only with this twice candlestick pattern. But also learn another important candlestick pattern. And learn money management for success in forex trading.