Hello Traders,
Based on last thread on Stick sandwich pattern analysis, hope all traders have enjoyed 2 immediate bull session followed by some mild profit booking.
Continuing the series of candlestick patterns and giving lights to smart traders, here is another pattern formed for subsequent breakouts - BULLISH ENGULF (Attached screen). Last two session losses are being recovered by today's bull ride which supported the pattern and I am sure it will be confirmed on coming weeks.
Some theory on the pattern :-
The Engulfing Pattern is a major reversal pattern comprised of two opposite colored bodies. The bullish Engulfing Pattern is formed after a downtrend. It opens lower than the previous days close and closes higher than the previous days open. Thus, the white candle completely engulfs the previous days black candle. Engulfing can include either the open or the close being equal to the open or close of the previous day but not both.
So from a psychological point of view - After a downtrend has been in effect, the price opens lower than where it closed the previous day. Before the end of the day, the buyers have taken over and moved the price above where it opened the day before. The emotional psychology of the trend has now been altered.
Also, Since I am learning option, I evaluated the pattern when the trend was reversed in the noon. So here is my first strategy in options considered to be a BULL LADDER (excluded brokerage)
Shorted 2 lots of 6400 PE Sept @ 371.85 (premium recieved = 37185)
Long on 2 lots of 6200 PE Sept @ 185.20 (premium debited = 18520)
Difference recieved = 186.65 (money credited = 18665)
Long on 10 lots of 6300 CE for October @ 40 Rs (premium debited = 20000)
I am sure the Engulfing pattern will give good valuations to above positions. So enjoy the rally and ride with the Bull kings.
Arun P
Based on last thread on Stick sandwich pattern analysis, hope all traders have enjoyed 2 immediate bull session followed by some mild profit booking.
Continuing the series of candlestick patterns and giving lights to smart traders, here is another pattern formed for subsequent breakouts - BULLISH ENGULF (Attached screen). Last two session losses are being recovered by today's bull ride which supported the pattern and I am sure it will be confirmed on coming weeks.
Some theory on the pattern :-
The Engulfing Pattern is a major reversal pattern comprised of two opposite colored bodies. The bullish Engulfing Pattern is formed after a downtrend. It opens lower than the previous days close and closes higher than the previous days open. Thus, the white candle completely engulfs the previous days black candle. Engulfing can include either the open or the close being equal to the open or close of the previous day but not both.
So from a psychological point of view - After a downtrend has been in effect, the price opens lower than where it closed the previous day. Before the end of the day, the buyers have taken over and moved the price above where it opened the day before. The emotional psychology of the trend has now been altered.
Also, Since I am learning option, I evaluated the pattern when the trend was reversed in the noon. So here is my first strategy in options considered to be a BULL LADDER (excluded brokerage)
Shorted 2 lots of 6400 PE Sept @ 371.85 (premium recieved = 37185)
Long on 2 lots of 6200 PE Sept @ 185.20 (premium debited = 18520)
Difference recieved = 186.65 (money credited = 18665)
Long on 10 lots of 6300 CE for October @ 40 Rs (premium debited = 20000)
I am sure the Engulfing pattern will give good valuations to above positions. So enjoy the rally and ride with the Bull kings.
Arun P
