To use the Japanese candlestick pattern, you need to enable the candlestick pattern from the X3 chart pattern scanner. See the attached screenshot for the purpose.

You can then turn individual categories of patterns on and off to your liking. For example, you can use only two and three candlestick patterns as needed. In addition, you can receive voice alerts, emails, and push notifications when new Japanese candlestick patterns are detected.

Please note that the Japanese candlestick pattern is just one of the pattern categories. It can also detect other powerful patterns such as harmonic patterns, Elliott wave patterns, and X3 patterns. Related Articles. No rest from the cold of North India as mercury goes down January 10, South Korea, US reduce military training against coronavirus 4 weeks ago.

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In a candlestick price chart , the wide parts of candlesticks are called "real bodies. The real body of a down candle is often black or red in color. In an up or bullish candle, the top marks the closing price and the bottom marks the opening price. The real body of an up candle is often white or green. The high and low prices for the period may be indicated by thin lines that look like wicks of the candle and that extend beyond the real body.

A bearish engulfing candle occurs when the real body of a down candle completely envelops the real body of the prior up candle. A bullish engulfing candle occurs when the real body of an up candle completely envelops the real body of the prior down candle. These engulfing candles indicate a strong shift in direction, and when combined with observation of the price-trending direction that precedes it, this shift creates the opportunity for a trading strategy.

The first step in applying the engulfing candle day-trading strategy is to determine the dominant trend direction, and thus the direction you will trade-in. An uptrend is defined by higher-swinging highs and higher-swinging lows in price.

Prices move in waves, advancing, pulling back, and then advancing again. In an uptrend, the advancing waves are larger than the pullbacks lower, creating overall progress higher. During an uptrend, you should take only long positions, buying with the intention of selling later at a higher price. A downtrend is defined by lower-swinging lows and lower-swinging highs in price.

In a downtrend, the declining waves are larger than the pullbacks higher, creating overall progress lower. During a downtrend, you should take only short positions, selling a borrowed asset with the intention of buying and returning it later at a lower price. Once the trend is established, wait for a pullback. If there is no trend, or it is unclear, don't utilize this strategy. Waiting for a pullback means you're getting advantageous pricing for the next wave of the trend when—and if—it unfolds. If the trend is down, watch for an upward pullback.

The pullback should not rally above the high of the prior pullback, as this violates the rules of a downtrend. If the trend is up, watch for a downward pullback. The pullback should not drop below the low of the prior pullback, as this violates the rules of an uptrend. A pullback should be composed of at least two price movements, indicating the price has actually corrected.

Pullbacks may move in the opposite direction of the trend or may just move sideways. With the trend isolated and a pullback occurring, wait for the engulfing candle strategy trade signal. During a downtrend, wait until a down candle engulfs an up candle. Enter a short trade as soon as the down candle moves below the opening price the bottom of the real body of the up candle in real-time.

There is no need to wait for the candle to be completed. For an engulfing candle strategy signal during an uptrend, wait until an up candle engulfs a down candle. Enter a long trade as soon as the up candle moves above the opening price the top of the real body of the down candle in real-time.

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Once a trade is initiated using the engulfing candle strategy, place a stop loss above the recent high for short positions, and below the recent low for long positions. The engulfing candle that occurs after a pullback in an overall trend is designed to get you into a trade as the next wave of the trend is likely to unfold. It doesn't always.