Question regarding engulfing patterns

Good morning,

I had a question,

The engulfing pattern in textbook examples looks like this:

My question is, how is this possible without a gap? Gaps dont occur too much in the forex market do they?

Or should I consider this also as an engulfing pattern?

Thanks, would love to hear from you

Gaps do occur randomly when there are spikes in data - remember that information obtained through your MT4 platform is technically 3rd party since it is CFD.

But don’t worry all too much about it. An engulf is an Engulf :slight_smile:

[Edited for a Forum Violation]

This is a fine question.

The least important of the four data, High, Low, Open and Close, is the Open. A tactic dependent on where the Open is relative to any of the other 3, or any other chart feature, is likely to disappoint.

But the message from the two types of pattern is very much alike - in the bullish examples, in both cases price traded below the low of the first day but traded above its high and also closed above its high.

Actually, it would still be a bullish engulfing pattern if Day 2’s close was above Day’s open but below Day 1’s high, just not such a strong indication.

Trading all 3 is pretty much identical - for a bullish pattern, buy at the close of Day 2, preferably if the pattern marks a resumption of an existing uptrend. Put a stop below the upward trend-line or below the low of Day 1 or a suitable prior swing low in the uptrend.

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My simple answer is most forex PA traders look at candle engulfing, not body engulfing.

The same type of flexibility of the rules also applies to patterns like the morning and evening star where the 2nd candle is completely outside of the 1st and 3rd bars in a traditional equities market but in a 24 hour market like forex you dont need a complete gap to have a morning or evening star.

Thanks guys, things are much clearer now. I will consider them both as engulfing patterns and use them as a reversal after confirmation.