hi traders we're going to talk about a candlestick pattern here ithat I don't
think it's talked about enough and it can give you a lot of insight into the
past and more importantly the future of how much the market actually respects a
certain candlesstick so the subject we're talking about here is encompassing bars
and we just have a random yes chart here if you can open this up on literally
almost any chart and you're going to find 20-30 examples in five minutes
so an encompassing bar is when a bar basically overshadows bars in front of
or behind it making them somewhat irrelevant I'll highlight a few examples
here so looking from left to right we see this large candlestick encompasses
the one prior to it we see this large one no next one does break it so concern
another big big example of this you'll see this a lot with bars like this like
long big big bold candlesticks kind of taking out all the information before it
or after it you'll see one really really key example of this candlestick on left
here that encompasses all the way up till we start getting a bit more market
movement here so what are encompassing candlesticks well an encompassing
candlestick is when one candlesticks total height basically overshadows any
bars directly prior or directly post of it you know before or after it now you
have to ask yourself why is this important
the reason it's important is well market psychology now no logging traders think
like Oh psychology that's not really 100% my thing I'm more of a technical
guy but as traders we have to realize that we wear many different hats we have
to wear the you know data analyst hat we have to aware the technicals have we
have to wear the psychology hat I mean we do so much psychology in technical
trading that I swear wearing tweed vests sometimes
the psychology behind the market is what drives price movement psychology you
know it's basic human psychology here we're talking you know green envy fear
those are like the big big drivers that we see in markets because you know
there's envy when you see a market rocketing up in a direction you thought
it was you want to get in so that people pile on where there's greed when people
have the market moving in their direction but they don't want to remove
that or trade on the market because they think I can get a few more points a few
more tics out of this and I can make a few more bucks and so this is a
definitely a market psychology thing so when we look at we have three examples
on here we'll look at the one the middle here the further the second one now the
second one we were looking backwards in the market so it's not quite as useful
to us but what we see is the fact that we have a high quite a tall candlestick
here and it encompasses all this data prior all of these candlesticks are
completely contained within this one candlestick between the highest high and
the highest and the lowest low of this candlestick so with that we can take
every one of these bars and essentially give them a lesser weight to how much
they're contributing to this chart and more importantly you'll see that when we
move forward in the market here and we have this example here so we have quite
a high candlestick quite a tall candlestick here and what it does is it
encompasses one two three four five other candlesticks and that is
incredibly important especially as the market is developing because we can just
take a look and say you know everything that happened within these like 1 2 3 4
5 candlesticks right now we're on a 60-minute chart so that's 5 hours of
trading now there might have been after hours or a whole host of reasons but we
have to take into account the fact that that one candlestick that one chart
pattern candlestick had enough info it moved a great enough
distance that it was able to encompass multiple other candlesticks and you'll
see this move particularly often when you get hard market movements we don't
quite see it here we only see the remnants of it now we look at this
extremely extremely tall candlestick here in this market and what we see is
the movement after you know the market can shoot back up through it ends up
actually does it actually ends up breaking it but a lot of movement after
these breaks is kind of lackluster because everything that happens until
the new highs broken past this candlestick or pass the encompassing
candlestick is not really much news you know if we take for instance and say
that this candlestick this red candlestick and we didn't get the slight
tiny market break here above it then all this trading that's happening post this
candlestick is it's kind of old news the market has recently moved through that
area there's nothing new really happening we know there are both buyers
and sellers all in that area and it's not as relevant so all the bars after an
encompassing candlestick are just not as relevant we have to take them with you
know say a grain of salt and just be like whoa you know obviously the mark
can move within this reason region so what really are we getting out of these
candlesticks are the hives being made within this this range as significant I
would say not and I hope that gave you a little bit of insight into encompassing
candlestick patterns as always this is Bruce Bank saying
enjoy trading
For more infomation >> Research Priorities for Learning Difficulties – James - Duration: 0:52. 
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