The Engulfing Bar indicator identifies any bar that engulfs the bar just prior to it. That means the high and low of the engulfing bar itself will always, as a rule, extend beyond the highs and lows of the bar prior to it. This indicator will alert on the chart the two types of engulfing candles, a bullish engulfing candle, and a bearish engulfing candle.
How to trade the indicator:
A bullish engulfing candle occurs when the “fat” part of an Up candle completely envelops a prior down candle. This is an indication of an uptrend continuation or a potential reversal of a downtrend. Similarly, a bearish engulfing candle occurs when the “fat” part of a Down candle completely envelopes a prior Up candle. This indicates a downtrend continuation or a potential reversal of an uptrend.
This is a MetaTrader 4 (MT4) indicator and works with all currency pairs and all timeframes. Once you download and install the indicator, it will appear in your trading chart, like the image shown above.