Downtrend Engulfing Confirmation
BullishFirst lower-wick green candle in the week after a weekly Downtrend Engulfing
Patterns are right about half the time. How far they rose and fell matters more than how often they rose.
Textbook shape
How to read it
After a Downtrend Engulfing is confirmed on the weekly chart, this is the first green daily candle with a lower wick inside the following week. The days after the engulfing week often pull back, and the candle that absorbs that pullback in its lower wick and still closes green takes this name. If the low of the two engulfing candles breaks while waiting, the setup is void and no entry candle prints.
In the record, US large caps entered at the weekly close spent the first week underwater (D+5 median −0.2%), while entering at this candle's close stood past that dip (D+5 +0.3%, D+30 +2.0% with 56% up). Six of ten weekly signals produced this candle within the week.
Most of that edge, though, came from selection. Among the signals that produced this candle, a weekly-close entry did about as well, and so did simply waiting three days without looking at candles. Its use is confirmation that the floor held for a week rather than timing, and below large caps even that confirmation added little.
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This pattern, on your own charts
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