You may have seen there are countless articles on the web declaring engulfing strategies are a sure bet and offer high probability trade opportunities. But does this approach really work? In this article I will do a thorough analysis of the data to prove if this method really stacks up.
This momentum strategy is very straightforward. All you need is the Bollinger bands indicator and to do some basic checking of chart candles. It trades on chart patterns that display signs of pending momentum – that is upward or downward acceleration in price.
All serious money managers know that the smart money is made not when the market is stable but when the market goes through a sudden state of change. Take for example, the end of a bull run or the imploding of an asset bubble.