How Bearish Engulfing Chart patterns work in the market.

We know very well the market has too many chart patterns. But the bearish engulfing is different from the other one. It is a bearish chart pattern

One more thing have you seen the swan on the bank of the pond? It’s also like that, the swan eats fish by first jumping into the sky and then taking it in one bite. The market also follows the same thing. Mean when that chart pattern format market has an uptrend.

This chart pattern has formed on the top like the market has jumped the market on toward on top. After the chart pattern has formed and the market doom to the downside.

This chart pattern has one more thing it’s easy to recognize and every trader can find it out very easily. It has a beauty that chart pattern also works in the forex, stock, and crypto markets.

That chart pattern indicates the buyer has tired and they can’t push the market upward. If you saw this chart pattern you must go sell side with it.

What Bullish Engulfing chart pattern

You know as well it’s a reversal technical chart pattern that indicates the market may be coming toward the downside. This chart pattern has consecutive green candles and on the top, a green candle has engulfed by a red candle. That chart pattern indicates now the seller has taken total control of the market.

Now the seller is in majority and will push the price aggressively down and the buyer has failed to push the price upside in the market.

Important Nots 

1. Bearish engulfing formed on the top of market.
2. It's not work well in choppy or range bound market.
3. Bearish Engulfing has required a proper upternd.

You must consider one thing in this chart pattern. It has worked to suspend the upward trend. That chart pattern follows an uptrend. And it’s a known candlestick chart pattern.

How to Take Trade on It

We have read about what is bearish engulfing in the prior paragraph. Now it comes to knowing how to take a trade on that chart pattern.

We also know a red candle covers the prior green candle with its high and low break. Then you can confirm market can go downside, but after you need to close below the engulfing chart pattern. Don’t be Harry just wait to close a fresh candle below that chart pattern.

After closing you can sell according to your affordable quantity.

What is the target –

Now come to the point of what is the target on that chart pattern. Target is the most important thing to consider for every trader in the market.

At this point we have to consider what is the target, In my opinion target is at least two times before your entry. Spause you have taken trade at 1.098630, and your stop loss is 1.098730, then your target will 1.098430.

If we calculate it then our measurement will be set at 2 times from our stop loss. The market has no emotion. Some the market returns nearest to your stop loss.

What is stop loss?

Stop loss more than essential from your take profit. If you haven’t seated your target, then okay, but if you have not set up your stop loss. Then there is a high possibility of wiping out our capital.

Trading is not hard to do you must have to follow your strategy in the market. Stop loss is part of the game and you must be aware that things in the market.

Now have to come to know where place to stop loss. First of all, you must check where the pattern has formed. What is high of bearish engulfing? Once you confirmed everything then you can place your stop loss on the high of the pattern with a little bit of buffering.

While setting up stop loss buffering has a role to play. Buffering help to save your stop loss to hit. Sometimes market touches its last high and drops down back on that time you set your stop loss with buffering then maybe your stop loss not hit.

If you have not set up your stop loss with buffering, then there is a high chance to hit it down. So almost use stop loss with buffering while trading bearish engulfing.

The limitations of utilizing a bearish engulfing chart pattern.

Every trader has aware of that chart pattern it’s very popular in the market and used by traders and investors to find out reversals in the market.

Fake Signals – Many times this chart pattern gives a fake signal in the market. When the market is stuck in a range or sideways at that time it starts to give up fake signals.

No Clarity – In this chart pattern, sometimes it has no clarity. It has many criteria to follow in the market. If it does not match any single condition then maybe it will give clarity to the trader.

Backtesting Limitation – In the past, the bearish engulfing chart pattern has performed well. But we can’t accept it will be performed well in future. Traders make sure they have a proper trading plan according to past-time performance.

Lack of Timing – The bearish engulfing candlestick chart pattern has a lack of timing. It’s not sure when it can perform and at what time frame it will perform. So that’s why traders must sit in front of the market to catch that chart pattern.