Read my previous part here.
It's essential to validate candlestick patterns with other technical indicators and market analysis before making trading decisions. Additionally, risk management strategies should be implemented to mitigate potential losses in case the pattern fails to materialize as expected.
Finally let's use TRX (TRON) price data like hypothetical two-day price movement for TRXto illustrate the bullish engulfing candlestick pattern.
Day 1: TRX opens at $0.050 and closes at $0.045. Throughout the day, the price fluctuates between a high of $0.055 and a low of $0.040. The resulting candlestick is bearish, indicating that sellers had control during the trading session.
Day 2: On the second day, TRX opens lower at $0.042 and experiences selling pressure early in the session, dropping to a low of $0.040. However, buyers step in aggressively, driving the price higher throughout the day. TRX eventually closes near the high of the day at $0.055, surpassing the previous day's high. The resulting candlestick completely engulfs the body of the previous day's candlestick, forming a bullish engulfing pattern.
In this example, the bullish engulfing candlestick pattern on the TRX price chart suggests a potential reversal from a downtrend to an uptrend. The larger bullish candlestick on the second day indicates that buyers have overwhelmed sellers, potentially signaling a shift in momentum.
Through three examples I think I have been able to present these issues and patterns to you nicely and I hope you will understand the things through three examples.
~ Regards,
VEIGO (Community Mod)