We have treated how to use the bullish engulfing candlestick pattern.
Today I will show you how to mix it with the RSI (Relative Strength Index) indicator for confirmation.
RSI supported by a Candlestick pattern can influence your entry if identified correctly.
The bullish engulfing candle combined with the RSI moving above 30 would be a higher probability entry into a long position.
Using this combination of indicators such as these can increase the confidence level of a trader when taking a position.
In the picture above, you will notice the movement of the RSI below the 30 level before the formation of the bullish engulfing candlestick pattern.
After the formation followed the reverse movement of the RSI above the 30 level and the market trend.
This order is not always the case, but sometimes when noticed can help boost confidence in an entry position.
Notice the reversal of the trend after the bullish engulfing candlestick pattern which caused an uptrend with higher lows as confirmation?
This trade setup is awesome and will increase your confidence in taking a trade.
However, it seldom happens this way and should not be taken as a yardstick alone for trend reversal signals.