Engulfing vs the 3 line strike - difference?

Beginner Questions
1

Been reading up a bit and these 2 patterns seem to conflict each other.
In the 3 line strike, the candle has engulfed the others, so why is it not a reversal pattern?

Engulfing

Pattern: Reversal
Strength: Medium

The Pattern: The previous bearish candle is totally engulfed by the bullish candle. This means it opened lower, rallied and closed above the previous high.

The Psychology: Bullish engulfing candles are very common but can be very powerful, as it basically means that bulls are buying like crazy.

Three Line Strike

Pattern: Continuation
Strength: Weak

The Pattern: Each bullish candle closes higher than the previous candle. The fourth candle gaps open and engulfs the previous candles.

The Psychology: This is normally a sign of profit taking. If the bulls don�t get too scared the trend should continue.

2

Do not treat candlesticks in isolation.

You need to get the full picture of what has happened
around these candlesticks.

Also do not mix bearish candles & bullish candles especially
if they are stockmarket candles.

Try to find examples of these candles on forex charts, then
observe what has taken place prior to & after they have formed.

Also different time frames can cause different effects.

PS This is true with any indicator of price, RSI, CCI, MACD,
sma, stoch, fibs. etc. they cannot just be taken in isolation,
they need confirmation.

3

Okay, but taking these ones in isolation and assume a trend beforehand.
Aren’t they the same thing. Both show an engulfed area yet one says it’s a continuation, and the other a reversal.

4

Do not mix bearish & bullish indications.

The candles you have shown are from a stock chart, not a
forex chart there is a difference.

Plus actually they are different indications, look how far the
profit take candle on the 2nd formation extends to, it takes in
all of the last three up candles.

Whereas the 1st formation just engulfs the one down candle.

It is dangerous to mix & compare these formations.

You are making a newbie mistake in not being able to see
the “forest for the trees.”

5

They are both bullish patterns. One shows a possible bullish reversal, the other shows a bullish continuation. However, they are both engulfing the candle before it so I don’t understand why the 3 line strike is a continuation. It could be a possible bearish reversal couldn’t it.
I realise it’s an extrapolation as it only shows a few candles but it’s an indicator pattern that they’re trying to show so it’s important to know what it might mean assuming an exact trend before say an obvious down or up.

If the 1st formation only engulfs 1 candle why is that a stronger signal for a reverse than that engulfs 2/3 candles - engulfing more candles sounds stronger to me but apparently it is just a profit taking exercise.

Just discussing…

6

Seeing two examples of candlestick patterns in

A.the same scale,

B. One on a downtrend, the other on an uptrend

is no way to make comparisons, where in fact there are
no comparisons to make.

Go to your charts & wait for these 2 patterns to immerge,
pattern 2 is better observed on an uptrend, on a 15M chart,
in the London session (6am - 10 am) Watch for price to
break out as from a flag, (usually late Asian session) go quickly up over 2 or 3 candles
about 100 pips, then stop & reverse as though it has hit a brick
wall, then shoot back down. Then reverse again & carry on in the
uptrend. This is because traders become jittery after a quick
upswing & jump out of trades, or take profit, also stops get
hit etc.

With the 1st pattern this can occur at the end of a flag when
the consolidation period has finished & the uptrend has just started,
possibly at 38%, 50% of the last upswing.

Take a look at your example of a flag from Investopedia, engulfing
pattern to start the uptrend?

There is also a one or two profit taking candles in there, one just
at the point where it needs to break through a resistance line at
211.25 ish. This is a great example of trader fear & profit taking.

The engulfing pattern is related to the inside bar (reverse engulfing)
both have the same charateristics.

PS I will also mention this again to reinforce it, candlestick patterns
on their own are not an indication of anything, they need confirmation,
with other factors, time of trading day, fibs, S/R lines, stochs etc.