The candlestick trading bible

121
THE CANDLESTICK TRADING BIBLE 
In the example above, the engulfing bar price action signal matches up 
with the 50 % and 61 % Fibonacci retracement level, the resistance 
level that becomes support is another confirmation to take this high 
probability setup. 
This trading strategy is very powerful, here is another example below 
that illustrates the power of 50% and 61 % Fibonacci retracement: 
Trading the market from 50% and 61% Fibonacci levels means you are 
trading from better price levels, as a result, you will put as many 
probabilities in your favor as possible, and that will allow you to 
become one of the most successful traders. 
 

---

122
THE CANDLESTICK TRADING BIBLE 
Trading the engulfing bar with trendlines 
Trend lines give traders an idea about the psychology of the market, 
especially, the psychology between buyers and sellers,moreover, it 
allows professional traders to determine whether the market is 
pessimistic or optimistic. 
This technical trading tool is used in different ways, either as support 
and resistance by drawing them horizontally, or to identify price and 
time by drawing trend lines vertically. There is no wrong way in using 
trend lines. 
In trending markets, we use simply trend lines to highlight a trend by 
connecting swing highs or swing lows in price; this way helps us find 
high probability entry setups in line with the general trend of the 
market. 
See the illustration below: 

---

123
THE CANDLESTICK TRADING BIBLE 
By connecting the extreme highs, we had a trend line that acted as a 
resistance level and the formation of the engulfing bar pattern shows 
a good selling opportunity.
If you used just horizontal support and resistance levels, you will miss 
this profitable trade. 
Learning about how to draw trend lines is never a bad idea, because it 
is the simplest analytic tool that you can use to analyze financial 
markets, it works in all markets, whether it’s forex, commodities, 
futures, or options. 

---