Engulfing Candle Indicator

The Engulfing Candle Indicator identifies and highlights specific two-candle reversal patterns where a current candle's body fully encompasses the previous candle's body to signal potential trend shifts.

Usage

The Engulfing Candle Indicator is used to spot immediate changes in market sentiment by visualizing engulfing price action directly on the chart. Traders use these signals to identify potential entry or exit points based on the following visual cues:

• Bullish Engulfing: A green triangle appears below the bar. This occurs when a candle opens below the previous candle's close and open, then closes above the previous candle's open, suggesting a shift toward upward momentum.
• Bearish Engulfing: A red triangle appears above the bar. This occurs when a candle opens above the previous candle's close and open, then closes below the previous candle's open, suggesting a shift toward downward momentum.

These signals are often used in conjunction with support and resistance levels to confirm price reversals.

Details

The script evaluates the relationship between the open and close prices of the current bar and the bar immediately preceding it. To qualify as an engulfing candle in this implementation, the current candle must "wrap" around the body of the previous candle.

The logic follows these criteria:

• Bullish Criteria: The current open must be less than or equal to the previous close and strictly less than the previous open, while the current close must be greater than the previous open.
• Bearish Criteria: The current open must be greater than or equal to the previous close and strictly greater than the previous open, while the current close must be less than the previous open.

The indicator also includes built-in alert conditions for both bullish and bearish signals, allowing for real-time notifications on bar close.

Settings

• From Month: Sets the starting month for the historical data range (1–12).
• From Day: Sets the starting day for the historical data range (1–31).
• From Year: Sets the starting year for the historical data range.
• To Month: Sets the ending month for the historical data range (1–12).
• To Day: Sets the ending day for the historical data range (1–31).
• To Year: Sets the ending year for the historical data range.

FAQ

What is an engulfing candle pattern? An engulfing pattern is a two-candle price action formation where the second candle is significantly larger than the first, completely overlapping or "engulfing" the price range of the previous candle's body.

Can I use this indicator for automated alerts? Yes, the indicator includes pre-configured alert conditions that trigger whenever a bullish or bearish engulfing candle is detected on the close of the bar.

How do I access the Engulfing Candle Indicator? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.