The engulf is probably the one I think about the most and with good reason. In choosing the right direction in which to trade I rely on the engulf. No matter how good a supply or demand level might look, if there is no engulf then there is no trade. Here we have a few examples of where an engulf led the way. Last week I identified 3 potential trading opportunities and 2 of them came in with big pips. Last weeks' forecast is here. I'm going to run through the analysis so you can see what I did and why and engulf was a key factor.
The idea was to trade short based on the fact that price had recently engulfed a significant decision point on the daily chart and there was profit potential below. There was a clear path for price to fall for profit.
After the engulf, I dropped to the H1 chart to look for a level to short from. The perfect level was found with an initial drop of over 150 pips. There were no opposing quality demand levels for a long way so a short trade was safe according to the plan. Price did retrace substantially but keeping to the plan, I stayed in the trade as there was no signal to exit.
When price reached the H1 supply it engulfed the nearest 3 demand levels quite quickly. I only require the engulf of the closest demand level to enter a trade so engulf of two more only increased the odds for me.
After a few large retraces price finally reached the higher time frame demand level and signaled an exit with an engulf. This trade was good for almost 200 pips.
GJ had a lot more pips on offer and it does tend to be one of the more volatile pairs which is great. After the daily demand engulf it was time to look for engulfs given how much profit was potentially on offer.
A supply level formed on the H1 giving an indication of the intended move down. The only thing left to do was wait for further confirmation on the 5m chart.
2 demand levels were engulfed on the 5m chart soon after the H1 supply was hit. The best entry was from the 5m supply.
This was the larger trade of the two with over 300 pips on the table. These trades may not come along very often but when they do they are well worth it.
I hope you found this useful.
The video analysis runs through the same trades:
The supply and demand levels on the H1 and below are discussed in detail in the members area. If you would like access to this then please click the join us as we trade link below, for more details or contact me.