Kupach Trading

Bullish Engulfing

BullishReversalBeginner

A green body swallows the red body before it. Buyers take over in one candle.

Verdict: SkipBitcoin 4H: 291 trades, won 46%, avg trade −0.1% vs random day +0.3%. Backtest

Downtrend
Bullish Engulfing: textbook shape, step by step

Price keeps sliding. Every little bounce gets sold.

step 1/7

Trade rules

DirectionLong (buy)
EntryAfter a decline, a candle CLOSES above the high of the two candles within 3 candles.
Cancelled ifPrice trades below the pattern's low before that close.
Target2x the pattern, projected from the breakout
3 common mistakes
  • Comparing the wicks: only the green body has to cover the red body.
  • Buying the engulfing candle's close instead of waiting for a close above the pattern's high.
  • Taking it in a sideways range: it needs a decline before it to reverse.

Backtest

same rules every time · equal size · no fees · method
MarketTradesWonAvg tradeRandom day
Bitcoin · 4H · 2017-202629146%−0.06%+0.25%
US large caps (50) · 1D · 2016-202686454%+0.65%+0.65%

Verdict: SkipNever beat a random entry, and lost money in some markets.

pattern −18%random +74%
Bitcoin 4H: pattern −18% vs random day +74% over 291 trades
pattern +565%random +564%
US large caps (50) 1D: pattern +565% vs random day +564% over 864 trades

Real examples

Bitcoin · 4H

Breakout Aug 19, 2021, exit Aug 20, 2021 (target)+5.64%
Pattern highDowntrend48,144 · Aug 14, 2021Bullish engulfing44,124 · Aug 19, 2021Confirmed
Bitcoin 4H, real candles from Aug 14, 2021

Boeing · 1D

Breakout Jul 28, 2021, exit Aug 11, 2021 (target)+3.26%
Pattern highDowntrend255.14 · Jun 10, 2021Bullish engulfing219.89 · Jul 26, 2021Confirmed
Boeing 1D, real candles from Jun 10, 2021

Mastercard · 1D

trapBreakout Jul 3, 2024, exit Jul 10, 2024 (stop)−3.16%
Pattern highDowntrend464.93 · May 16, 2024Bullish engulfing435.00 · Jul 2, 2024Confirmed
Mastercard 1D, real candles from May 16, 2024