About the Engulfing Candlestick Chart Pattern Indicator
The Engulfing Candlestick Chart Pattern Indicator for MT4 identifies one of the most widely used reversal patterns in technical analysis.
It automatically scans price action and highlights engulfing formations directly on the chart using visual arrows.
An engulfing pattern forms when a strong candle fully covers the body of the previous candle, signaling a potential shift in market sentiment.
A bullish engulfing pattern suggests buying pressure, while a bearish engulfing pattern points to selling pressure.
This Indicator can be applied to both trend continuation and reversal setups.
For best results, its signals should be confirmed with trend-following indicators or additional price action tools.
Free Download
Download the “engulfing-indicator.mq4” MT4 indicator
Key Features
- Automatically detects bullish and bearish engulfing patterns
- Plots clear arrow signals on the price chart
- Supports both reversal and continuation trading
- Works across all timeframes and currency pairs
- Easy-to-read visual signal format
Indicator Chart
The chart example shows the Engulfing Candlestick Chart Pattern Indicator applied to a live market.
Blue arrows highlight bullish engulfing patterns, while red arrows indicate bearish engulfing patterns forming on the chart.
Guide to Trade with the Engulfing Candlestick Chart Pattern Indicator
Buy Rules
- Wait for a blue arrow to appear on the chart
- Confirm the bullish setup using trend or price action analysis
- Enter a buy trade after the signal candle closes
- Avoid buy signals during strong bearish conditions
Sell Rules
- Wait for a red arrow to appear on the chart
- Confirm the bearish setup using trend or price action analysis
- Enter a sell trade after the signal candle closes
- Avoid sell signals during strong bullish conditions
Stop Loss
- Place the stop loss beyond the high or low of the engulfing pattern
- Allow a small buffer to reduce premature stop-outs
Take Profit
- Close the trade when an opposite engulfing signal appears
- Target nearby support or resistance levels
- Use a fixed risk-to-reward ratio if preferred
Engulfing Candlestick + MACD Trend Histogram Forex Scalping Strategy
This forex scalping strategy is designed to take advantage of short-term price reversals confirmed by the overall trend.
The Engulfing Candlestick Chart Pattern Indicator highlights key reversal points.
A blue arrow signals a bullish engulfing pattern, indicating a potential buy trade, while a red arrow signals a bearish engulfing pattern for potential sell trades.
The MACD Trend Histogram Bars Indicator confirms trend direction. A green histogram shows a buy trend, and a red histogram indicates a sell trend.
This setup works best on M5 and M15 time frames.
It suits traders who want fast entries in line with the prevailing trend and prefer clear visual cues for reversals.
Using the histogram as a filter reduces false signals and ensures trades are taken in the direction of the momentum.
Buy Entry Rules
- The MACD Trend Histogram must be green, indicating a buy trend.
- A blue arrow appears from the Engulfing Candlestick Indicator.
- Enter a buy trade at the next candle after the blue arrow forms.
- Place the stop loss below the recent swing low.
- Set take profit at the next intraday resistance level or when the MACD histogram turns red.
Sell Entry Rules
- The MACD Trend Histogram must be red, indicating a sell trend.
- A red arrow appears from the Engulfing Candlestick Indicator.
- Enter a sell trade at the next candle after the red arrow forms.
- Place the stop loss above the recent swing high.
- Set take profit at the next intraday support level or when the MACD histogram turns green.
Advantages
- Allows precise entry points based on candlestick patterns.
- Trend confirmation from the MACD histogram improves trade accuracy.
- Visual signals are easy to spot and follow for fast decision-making.
- Effective for multiple currency pairs and intraday time frames.
- Scalpers can quickly capture small price movements.
- Reduces emotional trading because rules are clear and structured.
Drawbacks
- May generate late entries if waiting for both trend and pattern confirmation.
- Not suitable for traders who prefer longer-term strategies.
- Requires monitoring multiple charts if trading several pairs simultaneously.
Case Study 1
On AUDUSD M5, the MACD Trend Histogram turned green at 0.6752, indicating a buy trend.
Shortly after, the Engulfing Candlestick Indicator displayed a blue arrow at 0.6755.
A buy trade was opened on the next candle at 0.6756.
Price moved upward steadily and reached the next resistance at 0.6792.
The trade captured 36 pips in profit, and the alignment of trend and reversal pattern made the entry reliable.
Case Study 2
On NZDJPY M15, the MACD histogram showed a red bar at 91.45, indicating a sell trend.
The Engulfing Candlestick Indicator printed a red arrow at 91.48.
A sell trade was opened on the next candle at 91.46.
Price dropped to the next support level at 91.12, resulting in a 34 pip gain.
Using both trend confirmation and the bearish engulfing signal helped achieve a quick and accurate scalp.
Strategy Tips
- Focus on high-volume sessions to capture strong momentum moves.
- Check higher time frames for trend context before entering trades.
- Keep an eye on spread and execution speed for scalping efficiency.
- Skip trades if the arrow appears too close to strong support or resistance levels.
- Use recent swing points to set precise stop loss and take profit levels.
- Do not overtrade; wait for clear alignment between trend and pattern signal.
- Consider marking important session highs and lows to help manage exits.
Download Now
Download the “engulfing-indicator.mq4” Metatrader 4 indicator
FAQ
What makes engulfing patterns useful in forex trading?
Engulfing patterns highlight sudden shifts in buying or selling pressure, often appearing at key turning points or during strong market moves.
Can multiple engulfing signals appear close together?
Yes. During volatile conditions, consecutive engulfing patterns may form as price fluctuates rapidly.
Summary
The Engulfing Candlestick Chart Pattern Indicator automates the detection of classic bullish and bearish engulfing formations.
Displaying signals directly on the chart saves time and removes subjectivity from pattern recognition.
Its flexibility across timeframes and market conditions makes it a useful tool for traders who rely on candlestick behavior to read market sentiment.
