Day trading was made famous during the tech bubble of 2000. From October of 1998 to March of 2000, the NASDAQ composite index went from 1492 to 5048, a whopping 240% return in 17 months. I remember infomercials touting day trading as a career!! Day trading back then was buy the open and sell the close. NEVER confuse genius with a bull market. In this informative piece I will highlight intra-day high probability of success set-ups using popular candle patterns. I'm assuming our readers have basic knowledge of candlestick construction. I prefer analyzing intra-day candle set-ups because of the rapid dissemination of market information. I don't like to be the last one to show up at the party! I will be highlighting the Engulfing formation. Let us review:
Bullish Engulfing Pattern:
The bearish candle real body of Day 1 is usually contained within the real body of the bullish candle of Day 2. On Day 2, the market gaps down; however, the bears do not get very far before bulls take over and push prices higher, filling in the gap down from the morning's open and pushing prices past the previous days open. The power of the Bullish Engulfing Pattern comes from the incredible change of sentiment from a bearish gap down in the morning, to a large bullish real body candle that closes at the highs of the day. Bears have overstayed their welcome and bulls have taken control of the market. (more)
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