Power Pattern II: The Engulfing Candle
When one side completely overwhelms the other. This is a momentum signal.
What is it?
A two-candle pattern where the second candle's body completely covers (engulfs) the first candle's body.
Bullish Engulfing
A small Red candle followed by a massive Green candle.
Psychology: Sellers are exhausted. Fresh buyers have entered with huge volume.
Bearish Engulfing
A small Green candle followed by a massive Red candle.
Psychology: Buyers have given up. Sellers are taking control aggressively.
How to Trade It (Scalping)
Engulfing patterns are perfect for option scalping.
- Entry: As soon as the Engulfing candle High is broken.
- Stop Loss: Below the Low of the Engulfing candle.
- Target: 1:2 Risk Reward (usually the next resistance level).
Pro Tip: An Engulfing candle on the 5-minute timeframe is more reliable than strictly 1-minute. Use 5m for confirmation.
*Disclaimer: NSE/BSE frequently revise Lot Sizes and Expiry Days (e.g., SEBI Circulars 2024/2025). Always check the latest circular on nseindia.com before trading.
Standard Disclosure: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. The content provided here is for educational purposes only and does not constitute financial or investment advice. AlgoStraddle Academy is not a SEBI registered investment advisor. Trading options involves high risk and capital can be lost.