The candlestick trading bible

129
THE CANDLESTICK TRADING BIBLE 
False breakouts are one of the most powerful price action strategies, 
it occurs in all types of markets, and if you know how to use it in 
combination with the engulfing bar pattern in a major support level or 
resistance, you will make money in the market, because you will buy 
intelligently the bottoms and sell the tops.
See the illustration below: 
 
 
 
 
 
 
 
 
 
 

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130
THE CANDLESTICK TRADING BIBLE 
Trading the engulfing bar with supply and demand zones? 
Supply and demand areas are more powerful than support and 
resistance, it is the place where banks and institutions are buying and 
selling in the market, if you can identify these turning points, you will 
make a difference in your trading account. 
To trade the engulfing bar pattern successfully with supply and 
demand areas, you have to be able to identify quality supply and 
demand levels on a chart, according to my experience; there are three 
factors that define quality supply and demand areas: 
1-The strength of the move:
Pay more attention to the way the price leaves the zone, if the market 
leaves the area quickly, this is an indication that banks and institutions 
are there. 
2-Good profit zone: 
You have to make sure that the level provides a good risk/reward. 
3-Bigger time frames: 
The daily and 4-hour supply and demand areas are the most powerful 
zones in the market. 
The chart below shows a quality supply area, as you can see the move 
was very strong, and that indicates that banks and institutions were 
there.
The formation of an engulfing bar was a clear signal that the bears are 
still willing to sell from the same price level. 

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