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The Engulfing Candle is one of the simplest and possibly most underrated chart patterns in trading.

In this tutorial, I’ll show you how to identify the pattern, what it tells us as traders and I’ll give you some trading strategies that use this pattern.

Many people over-complicate this pattern, but it’s very simple.

There are basically 2 types of Engulfing Candles.

Here’s how to identify them. 

Bullish Engulfing Candle

A Bullish Engulfing candlestick pattern signals a potential reversal from a downtrend to an uptrend.

Here’s what to look for:

• 2-candle formation
• First candle is smaller than the second candle and the close is lower than the open
• Second candle has the largest candle body that has been seen in awhile and the close is higher than the open
• The high of the second candle is higher than the high of the first candle
• The low of the second candle is lower than the low of the first candle
• The second candle closes near the high of its range
• This pattern has to print on a support or resistance level

Examples

Here is an example of a Bullish Engulfing pattern on a Bitcoin chart. The blue arrow shows the Engulfing Candle. 

Notice how this was a dramatic turning point on the chart.

This obviously won’t happen all the time, but it does happen frequently enough that you should pay attention.

Here’s a second example on the USDCHF Forex pair.

This one rallied hard after the pattern printed on a previous support level.

So those are just a couple of examples of when a Bullish Engulfing Candle can signal an upward move in a market.

Now let’s take a look at the opposite of this pattern.

Bearish Engulfing Candle

A Bearish Engulfing candlestick pattern signals a potential reversal from a downtrend to an uptrend.

Here’s what to look for:

• 2-candle formation
• First candle is smaller than the second candle and the close is higher than the open
• Second candle has the largest candle body that has been seen in awhile and the close is lower than the open
• The high of the second candle is higher than the high of the first candle
• The low of the second candle is lower than the low of the first candle
• The second candle closes near the low of its range
• This pattern has to print on a support or resistance level

Examples

This example on the AUDNZD chart shows how fast price can move after a Bearish Engulfing candle pattern.

Notice how it prints on a previous level of resistance.

Now here’s an example on the NZDCAD chart.

Again there was a sharp move after the engulfing candle prints on the resistance zone.

Take any chart and start looking for this pattern.

You’ll notice that it happens more often than you might expect.

But don’t stop there.

Be sure to test this pattern out before risking real money.

My Favorite Engulfing Candle Resources

Here are resources for Engulfing Candle trading strategies that I’ve found super useful.

You can use them to help you create, test and trade Engulfing Candle trading strategies.

How to Prove Engulfing Candles Actually Work

At this point, you’re probably wondering: Does this actually work?

That’s a perfectly natural question and the only one that matters, quite frankly.

So here’s the truth about trading Engulfing Candles…

Just like with any other trading method, the success of the chart pattern will be determined by the specific trading plan.

There are many ways to enter and exit trades with this pattern, so you need to define these parameters in order to have a real trading strategy.

I’ll provide specific trading strategy plans in the next section. 

But here’s where most traders get tripped up…

Remember, there are only 2 types of trading strategies, discretionary and fully automated.

Most Engulfing Candle strategies are discretionary.

Therefore, the results can vary greatly between traders.

So it is essential that you backtest it for yourself to find out how good you are at identifying the setups in your trading strategy plan.

Practice can also improve your skills, so don’t be afraid to keep running through simulations until you feel you’ve maxed out your potential.

Now it might be possible to automate an Engulfing Candle strategy. If so, then the results are usually reproducible between traders.

Even then, you still have to create an automated strategy and test it on every market/timeframe you trade.

Always verify, never take another person’s word for it.

Remember, profitable trading strategies usually start out as very unprofitable ideas.

So start experimenting and don’t be afraid to test your own ideas.

You just might discover something amazing.

Trading Strategies That Use Engulfing Candles

Here are some trading strategies that you can review and start testing for yourself.

I’ve also included my own backtesting results so you can compare notes and make improvements on these strategies.

Final Thoughts

This super simple candlestick pattern could be the basis for your next grail trading strategy.

It is easy to identify and can be programmed into most trading platforms.

But it’s up to you to test it out and find out if it will work.

Remember, the most profitable strategy in the world is the one that fits YOU best.

Now get to work. 

Bitcoin has notched its highest-ever weekly close as crypto market momentum continues and the cryptocurrency is again nearing its all-time high.

Bitcoin (BTC) has closed at a weekly gain for the past six weeks in a row, and its most recent close at midnight UTC on May 18 was its highest weekly close ever at just below $106,500, according to TradingView.

Its last highest weekly close was in December when it reached $104,400. It later went on to reach an all-time high of $109,358 on Jan. 20, according to TradingView. 

Bitcoin is now less than 3% away from its peak price and has gained 2% over the past 24 hours to trade around $104,730 at the time of writing.

Bitcoin also posted its highest-ever close in a 24-hour period on May 18. However, this is not the largest daily gain Bitcoin has made.

“Bitcoin just had its highest daily candle close… ever,” investor Scott Melker posted to X on May 19. 

With a daily close above $105,000, “Bitcoin will develop a brand new higher high,” said analyst Rekt Capital.

Bitcoin’s weekly gains over the past six weeks are mirroring its gains in November when it added $30,000 in three of its largest weekly candles ever.

It has added around $12,000 so far in May, climbing from $94,000 to over $106,000 before it pulled back to around $105,400.

Related: BTC price to $116K next? Bitcoin trader sees ‘early week’ all-time high

Additionally, Arete Capital partner “McKenna” said the Coinbase premium had returned, which measures US sentiment by comparing the difference between Coinbase’s BTC/USD pair and Binance’s BTC/USDT equivalent. 

The “strength of this bid on a Sunday night feels strange,” they said, adding its “possible someone knows some important news dropping next week.”

Bitcoin’s CAGR cools down

On May 18, analyst Willy Woo dived into Bitcoin’s compound annual growth rate (CAGR), noting that it was trending downward as the network continues to store more capital.

“BTC is now traded as the newest macro asset in 150 years, it’ll continue to absorb capital until it reaches its equilibrium,” he said.

Woo compared it to long-term monetary expansion of 5% and GDP growth of 3%, estimating that Bitcoin’s annual growth rate will be around 8% in around 15 to 20 years when it has settled. 

“Until then, enjoy the ride because almost no publicly investable product can match BTC performance long term, even as BTC’s CAGR continues to erode.”

Magazine: Arthur Hayes $1M Bitcoin tip, altcoins ‘powerful rally’ looms: Hodler’s Digest

]]> https://earlybirdsinvest.com/bitcoin-notches-record-weekly-close-after-highest-ever-daily-close-candle/feed/ 0 37035 https://earlybirdsinvest.com/china-confirms-us-tariff-suspension-bitcoin-nears-ath-with-huge-green-candle-to-105k/ https://earlybirdsinvest.com/china-confirms-us-tariff-suspension-bitcoin-nears-ath-with-huge-green-candle-to-105k/#respond Mon, 12 May 2025 07:50:11 +0000 https://earlybirdsinvest.com/china-confirms-us-tariff-suspension-bitcoin-nears-ath-with-huge-green-candle-to-105k/

Bitcoin opened the week with a strong hourly move, climbing 1.7% to reach $105,705 in early Monday trading.

The surge brought the asset to its highest level since January’s all-time high of $109,356, adding fresh momentum following a month of sideways movement.

The one-hour candle, printed between 07:00 and 08:00 UTC, carried Bitcoin from approximately $103,200 to just under $106,000, putting it within 4% of price discovery levels. However, it has retraced slightly to $104,700 as of press time.

The rally comes as the BBC is now reporting confirmation of progress in US-China trade negotiations, with Scott Bessent stating,

“After “robust” discussions, the US and China have agreed a 90-day pause on “reciprocal” tariffs, meaning both sides will reduce their tariffs by 115%.”

The move also coincided with a risk-on environment in broader markets. Spot gold fell 1.4% on the session, retreating to $3,278 per ounce as optimism surrounding US-China trade talks weighed on safe-haven demand.

Meanwhile, WTI crude futures climbed 1.5%, extending a multi-day rally. Bitcoin’s price action mirrored this macro rotation, tracking higher alongside oil and equities while decoupling from gold.

This pattern has emerged during periods of reduced risk aversion, suggesting traders are reclassifying Bitcoin as a beta-macro asset rather than a defensive hedge.

Flows into Bitcoin spot exchange-traded funds also remain a key driver. According to data compiled by Farside Investors, cumulative inflows across US-listed spot Bitcoin ETFs crossed $41 billion, with $321 million of inflows on Friday.

The products are absorbing BTC at rates six times higher than the current mining issuance. These inflows reinforce upward price pressure, particularly during low-liquidity periods when order book depth is limited.

Technical indicators point to near-term resistance. The relative strength index (RSI) on the daily chart sits at 73, in overbought territory, and previous moves above 105k have failed to hold.

Price action around the $106,000 level could prove decisive, with bids stacked slightly below and limit sells beginning to populate overhead.

The broader context reflects the improved macro sentiment. The BBC reported that China has now confirmed “suspension of tariff countermeasures,” helping calm investor concerns over tariffs and global demand.

As a result, the US dollar has traded relatively flat, with yields hovering near recent lows. This environment supports risk assets and has historically favored crypto price appreciation.

The move also follows Bitcoin’s rebound above $100,000 last week, when renewed inflows and improving sentiment erased April’s tariff-driven drawdown. Traders are now watching for sustained momentum as the asset approaches previous highs.

While the $105,000 level has psychological weight, it remains a technical midpoint between resistance at $106,400 and support near $102,400.

Monday’s activity places Bitcoin back near the upper boundary of its 2025 range. Whether flows and macro conditions can support a sustained move beyond the January high will likely depend on upcoming catalysts, including Tuesday’s US CPI report and Federal Reserve commentary.

For now, Bitcoin’s return to $105,000 reaffirms its position at the forefront of risk appetite in global markets.

A closely followed on-chain analyst believes that Bitcoin (BTC) is at a critical juncture and may be one big move away from signaling bull market exhaustion.

Pseudonymous analyst Checkmate tells his 114,800 followers on the social media platform X that Bitcoin is facing heavy selling pressure at current levels based on its heatmap, a visual tool that shows where buy and sell orders are stacked in the orderbook.

“Bitcoin is working its way through a very dense supply cluster between $93,000 and $100,000.

Pretty much blue skies above $100,000.”

According to the analyst, Bitcoin bulls need to step up and gobble up the selling pressure all the way up to $100,000. Otherwise, BTC could print a bearish lower high structure and signal that the bull market is over.

“In my view, it’s pretty important that Bitcoin clears this price zone in the near term.

We’re sitting right in the middle of a decision point, and all it will take is one big red or green candle from here to convince people of a lower high, or bull continuation, respectively.”

Checkmate’s chart shows that hundreds of thousands of BTC positions are underwater as Bitcoin struggles to move above $95,000.

The analyst also says that hesitation at current levels might be seen as a sign of trend exhaustion.

“We don’t want to keep chopping, to be honest, need to establish a clear trend.”

While it appears that sellers have the upper hand above $95,000, Checkmate notes that demand for Bitcoin exchange-traded funds (ETFs) remains strong.

“Cumulative inflows into the Bitcoin ETFs have hit a fresh ATH (all-time high) of $40.62 billion.”

At time of writing, Bitcoin is trading for $94,816.

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XRP Price Still On Track For Mega Candle

Crypto analyst Egrag Crypto has been very vocal on X (formerly Twitter) about the bullishness of XRP. The analyst has become known for calling the XRP price increase for months before the impressive 2024 rally. Even as that rally has cooled off and the altcoin is now struggling at support, the crypto analyst has not deviated. Rather, he continues to call out that the cryptocurrency is still quite bullish, which he expects to hit double-digits at some point.

In a recent post, the crypto analyst explained that the XRP price is still on track to move upward. In what he calls the ‘blue ocean’, Egrag Crypto points out that investors are now “swimming with sharks”. In this case, XRP is being gobbled up at a rapid pace, which could set it on a path to see rapid recoveries.

With the positive sentiment rising, the crypto analyst sees the XRP price exploding soon. He explains that a mega green candle is on the way, and this could drive the price finally above double-digits. In this blue ocean, Egrag Crypto sets three price targets. The first is $9.5, and then moving further into $17. Last but not least is the $27 target, something that the crypto analyst has continuously predicted for over a year now.

Currently, the XRP price is still trading just above the $2 support, so this means that it has a long way to go before it hits the analyst’s targets. The expectation of XRP ETFs being launched has also been put forward by many in the community as a potential factor that could trigger a rise in the XRP price.

Previously, there had been rumors that the ProShares XRP ETFs would launch on April 30. However, Bloomberg’s ETF expert James Seyffart has said that there are no plans to launch on this date, and there is no specified date yet. Nevertheless, the fund is expected to launch its XRP ETFs in the short to medium term, and this is expected to be a catalyst for an XRP price increase.

Solana has been under intense selling pressure since reaching its all-time high in late January. The price has struggled to regain momentum, facing negative sentiment as the meme coin market continues to decline, significantly impacting Solana’s ecosystem. Analysts suggest that speculative meme coin trading is one of the primary reasons altcoins, including SOL, have underperformed compared to Bitcoin.

Crypto analyst Jelle shared a technical analysis on X, highlighting that the SOL/BTC pair is breaking down from a key support level. However, Jelle also noted that there are still 2 days and 15 hours left before the candle closes, meaning the final outcome remains uncertain. If the breakdown is confirmed, SOL could see further declines against BTC, signaling continued weakness in the altcoin market.

Solana’s performance has been closely tied to meme coin speculation, which initially fueled its surge but is now leading to downside pressure. The next few days will be crucial in determining whether SOL can reclaim key support levels or if further downside awaits. Investors are closely watching BTC’s dominance and Solana’s ability to hold its ground as the broader market seeks clarity on altcoins’ role in this cycle.

Solana Faces A Big Test

Solana is now trading at its lowest levels since November 2024, effectively erasing all the gains from the post-election rally. Once a leading altcoin that outperformed many in the market, Solana is now struggling to regain momentum amid a broader sell-off. Meme coin speculation, which was once a catalyst for its meteoric rise, has now become a major risk factor, contributing to sustained selling pressure and increasing concerns about the network’s long-term sustainability.

This shift in market sentiment was inevitable, as speculative frenzies often result in major corrections. Meme coins, which had driven record-breaking transaction volumes and high network activity, are now seen as a liability rather than an asset. Many investors who flocked to high-risk meme coin trading have either exited the market or are facing significant losses, which has led to reduced liquidity and further price declines.

Jelle shared an analysis on X, revealing that SOL/BTC is breaking down from a key support level. However, he cautioned that the 3-day candle still has 2 days and 15 hours before closing, meaning that a decisive breakdown is not yet confirmed. He also noted that while price action appears weak, a locked-in bullish divergence at support could still occur if buyers step in aggressively before the close.

For now, Solana remains at a critical juncture, with the next few days expected to be pivotal in determining its short-term trend. If bulls manage to defend key support levels, a recovery rally could follow. However, if the sell pressure persists and confidence remains low, SOL could experience further downside, extending its correction phase.

SOL Testing Fresh Demand Levels

Solana is currently trading at $168 after setting a new lower low around $163, signaling that bears still have the upper hand in the short term. Bulls are now testing fresh demand at this level, and they must push the price above $170 as soon as possible to maintain the bullish structure. This level will serve as a key short-term resistance, and reclaiming it would be the first step toward a recovery rally.

If SOL fails to hold above $170, the risk of a massive correction increases, with the next key support zone around $150. A continued downtrend could expose SOL to deeper losses, especially if broader market sentiment remains bearish.

However, a successful reclaim of the $170 mark followed by a breakout above $190 in the coming days would be a strong signal of strength. A move above $190 would suggest that bulls are regaining control, setting the stage for a potential push back toward $200 and higher supply zones.

Featured image from Dall-E, chart from TradingView

Ethereum’s price action in the past seven days has led to the creation of a capitulation candle that might send it on another surge within the next eight to twelve weeks. This capitulation candle caught the attention of crypto analyst Ted Pillows, who noted an interesting repeating capitulation pattern for Ethereum. 

According to technical analysis by Ted Pillows, Ethereum has printed a capitulation candle in early 2025, just as it did in the first quarter of 2024 and the third quarter of 2023.

Capitulation Candles And Ethereum Historical Patterns

TedPillows’ analysis highlights that the Ethereum price has undergone three major capitulation events in the past two years, all of which led to substantial price rebounds. Particularly, these capitulations have taken place in the weekly candlestick timeframe, where the Ethereum price witnessed intense selling pressure throughout the week. However, historical price playout shows that these capitulations have often marked the bottom before a massive price rally. 

Related Reading

The first of such capitulations occurred in Q1 2024 and eventually led to a 100% rally over the next three months, with the Ethereum price reaching $3,950. The second capitulation took place in Q3 2024, leading to a similar upswing. With Ethereum now experiencing another capitulation moment in early 2025, the analyst suggests that the pattern is set to repeat. He believes that Ethereum is once again forming a market bottom, setting the stage for an aggressive upward move.

Ethereum’s 100% Price Surge And Potential Peak

If Ethereum follows its previous trajectory, the next eight to twelve weeks could bring a significant price increase, even as the leading altcoin currently struggles around $2,700. A 90%-100% pump after the recent capitulation would push the Ethereum price past key resistance levels and above its current all-time high. 

Related Reading

TedPillows’ analysis suggests that Ethereum’s ultimate price target following this capitulation could reach as high as $8,000. However, it is likely to encounter significant resistance near $3,950, a level that has historically triggered rejections in past capitulation cycles. Should Ethereum struggle to break through this barrier again, a temporary pullback could be on the horizon before any sustained move higher.

Meanwhile, Spot Ethereum ETFs are attracting heavy inflows despite Ethereum’s price downturn. Institutional investors appear to be capitalizing on the dip and increasing their ETH holdings in anticipation of a broader market rebound.

Spot Ethereum ETFs have recorded $513.8 million in inflows in the last six trading days, with BlackRock leading the charge by acquiring $424.1 million worth of ETH. This steady accumulation from institutional holders suggests growing confidence in Ethereum’s long-term potential and could lay the foundation for the projected 100% surge in the next eight to twelve months.

At the time of writing, Ethereum is trading at $2,725, down by 4% in the past 24 hours.

Featured image from Unsplash, chart from Tradingview.com