If you have placed a sell stop order few pips below the low of the BEOB candlestick and targeted the next pivot zone, it would have turned out to be a winning trade with a decent reward to risk ratio. By definition, it is a Bearish Outside Bar (BEOB). In figure 2, we can see a large bearish candlestick has engulfed the previous, smaller, bullish candlestick. If the closing price is lower than the opening price, then it is a BEOB and if the closing price is higher than the opening price, you guessed it right, it is a BUOB.ДЇigure 2: Bearish Outside Bar Triggered Downtrend If you see a bar has higher highs and higher lows compared to the previous bar, it is an outside bar. In the western trading industry, these patterns are better known as Bullish Outside Bars (BUOB) and Bearish Outside Bars (BEOB). Just like pin bars, bullish and bearish engulfing candlestick patterns also signal a reversal of the prevailing trend.

#2: Bullish and Bearish Engulfing Patterns Hence, trailing your open position based on ATR or X-bar stop losses could be a good strategy as it would maximize your profit in the long-run. However, when you find pin bars forming at the extreme high or low of a sustained trend, it would signal a complete reversal of the prevailing trend. If you are a short-term trader, you can simply target a reward to risk ratio of 3:1 or any other ratio that suits you. Once your order is triggered, you can look for next support and resistance levels to find your primary profit target. Pinbar setups are triggered once the price of the next candlestick breaks above the body of the pinbar. The way you trade pin bars is you wait for the assetвЂ™s price to break above or below the high or low, respectively. In Figure 1, we have identified two pin bars, a bullish one and a bearish one. A pin bar forms when the price goes up or down during a single time period, but the closing price remains within the previous bar. Pin bars are the most effective ways to trade candlesticks as these formations tend to create high probability price action trading setups. The 8 Candlestick Trading Strategies #1: Pin Bar Reversals Patterns LetвЂ™s take a look at how you can benefit from identifying these patterns and develop trading strategies around them. We have identified eight major candlestick patterns that actually work in Forex. However, not all patterns offer the best win rate in Forex. There are single period candlestick patterns like the pin bars, but also, you can find patterns that involve more than two bars, like the Three White Soldiers. Candlestick patterns come in different sizes and shapes. Since Japanese rice traders developed the Candlestick by incorporating open, high, low and closing prices, traders have identified a number of patterns that offer high probability trading opportunities. Candlestick trading strategies involve determining the timing of market entry based on high probability patterns and managing the trade according to some predetermined rules that conform to your money management policy. Candlesticks represent price and they show all data points at one glance. When it comes to trading price actions, finding opportunities in the market by looking for candlestick patterns is one of the best ways to go about it.

Candlesticks reversal patterns