Engulfing Indicator MT4 | MT5

The Engulfing Indicator falls under the patterns category of technical analysis indicators. It displays blue and red arrows on the MetaTrader charts to help traders identify bullish and bearish engulfing patterns.

• Bullish Engulfing: A large bullish (green) candle completely engulfs the previous bearish (red) candle. This pattern suggests a shift from selling pressure to buying momentum, signaling a potential mong opportunity. 
• Bearish Engulfing: A large red candle completely engulfs the previous green, indicating increased selling pressure, and signaling a potential short opportunity.

Furthermore, these special candles help traders in various trading strategies, such as:

• Potential reversal:

- Bullish reversal: At the bottom of a downtrend, if a blue arrow appears, it may confirm a potential bullish reversal. Traders should use this signal alongside their analysis to confirm the buying opportunity.

- Bearish reversal: At the top of an uptrend, if a red arrow appears, it may indicate a potential bearish reversal. Traders should use this sell signal alongside their analysis.

• Trend continuation:

- During a downtrend, if a bearish engulfing candle reappears after a correction, it signals, with a break below the last support, a continuation of the bearish momentum.

- During an upward trend, if a bullish engulfing candle reappears after a correction, it signals, with a break above the last resistance, a continuation of the bullish movement.

1. In the first trading example displayed on the MetaTrader 4 chart, an uptrend is observed. Following a correction, a bullish engulfing candle emerges, with a breakout above the last resistance level, both confirming the continuation of the bullish pressure. At the trend's end, a significant red engulfing candle forms, indicating a potential reversal and signaling opportunities for short trade entries.

2. In the second trading example displayed on the MetaTrader 5 chart, during a downtrend, and after any trend correction, a bearish engulfing emerges alongside the dropping of the price below the previous support level, confirming the continuation of the bearish pressure. Near the trend's end, a green engulfing candle appears, indicating a potential reversal and signaling opportunities for long trade entries.

It is highly recommended to combine this indicator with other technical indicators, such as support & resistance indicators, RSI, and MACD2lines, and use it just for decision confirmation.