Hi guys, I’ve only began to study FX for about 2 weeks now, and there is something I can’t explain.
I read about engulfing candles, but how is it possible that in this “Bullish Engufling” the open of the white candle to be lower than the close of the black one? Since the transition to the next candle(let’s say in an 1H Chart) is made instantly the opening of the candle should be exactly where the previous close was. Do i need to change something to be able to see those engulfing candles?
Same thing with this Harami example 
How can the open of the last candle be so much higher that the close of the previous one??
I hope my question is not so stupid and I would be very grateful if someone could explain.
Cheers
The answer is that you’re looking at a representation of candlesticks from stock markets and other markets where price is prone to ‘gap’ between time intervals. This happens much less on Forex charts, with the exception of weekend gapping. In the above, if they are day candles for example, price may gap between the close of the stock (or other) market in the evening and the open next morning.
Google “The Forex Candlestick Difference: What Sets It Apart from Other Markets” for more details…
Thank you so much for the answer.
Most if not all engulfing candles on FX charts will have similar opening highs and lows as the candle to the left.
Those candlesticks are for representation only, not real life (but then candles aren’t really that useful either)
I have also noticed that the trading software and broker you use can minimize these gaps.
If your broker offers pip candlestick charts instead of pipette these gaps appear alot more often. I use to use plus500 which only shows the market in pips. There were often gaps. Now I use Oanda which offers pipettes and has different online trading software. I see very little, if any, gaps.
If you trade engulfing candles(and I do) I recommend shopping around and testing other brokers. You don’t want to miss out on trades due to gaps appearing on your charts and causing confusion.
Well, the only gaps I can see are between the Friday and Monday candle and that’s it. And I can’t really imagine being otherwise. There can’t be any gap between close and next open since the transition is made instantly(except Fri-Mon), at least this is what makes sense to me.
lovethepips - have you heard about Renko charts? they only show movement in pips and completely ignore the timeframes. Quite useful sometimes.
Thanks for that recommendation. I never saw that when I used plus500. Maybe I just missed it though. 