Engulfing candle at a liquidity zone

Price action · Timeframe: H1 / H4 · Sessions: London and NY

A candle that fully engulfs the previous one right at a relevant support or resistance.

How it works

A bullish engulfing (body covering the previous bearish body) shows buyers have absorbed all the selling pressure. On its own it is not very reliable; it gains value when it appears at an important level such as the previous day's low or a swing low.

Step-by-step rules

1. Locate a key level (PDL/PDH or the 20-candle extreme).
2. Wait for an engulfing candle in the reversal direction at that level.
3. Entry at the close; stop beyond the engulfing extreme.
4. 2R target.

How Marketalyx tests it

Detector (H1, 02:00-16:00 NY): engulfing candle with its extreme within ≤0.3 ATR of PDL/PDH or the 20-candle extreme; stop at the extreme; 2R target.

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Educational content. No strategy guarantees profits and past performance does not guarantee future results.