Model absorption - Price Action setups

Because of the contrast, MP for the trader relatively high probability of a good, profitable entry into the market. Required components of the bright signal - 2 candles that follow one after the other (or bullish and bearish or vice versa). In this case, the second candle surpasses the first value of his body, as if absorbing it.

Fig.1

Bullish and bearish absorption

For MP important are the following conditions:

1. Presence of a pronounced upward or downward trends can be short.
2. The body of the second candle should be more (absorb) the body first. Shadows can not be absorbed, then the signal is considered to be weaker.
3. The body of the second candle should be a contrast in color to the body first. Exception: a small body of the first candle (Dodge or close to it).

Figure 1 you can see both versions of the MP. Cover only the size of the body of the second candle, not its shadows.
Bear MF often represented by a small candle of any color (option dodge or top), which is absorbed by a long black (red) candle. Bear MP is of particular importance after the growing trend of sufficient mileage.

If the second candle is not fully absorbed the shadow of the first, this configuration is considered significant, but weaker.

Figure 2

Bull MP appears in a falling market. First formed small red (black) candle (Dodge), which is absorbed by the growing large candle. The model shows a good turn in the case of long-term downward trend.

Figure 3

As bullish and bearish engulfing need confirmation (gap, third white or red candle, etc..) There are such variations bullish engulfing pattern, which confirms the candle is represented as a component of candlestick patterns.

MP is a bullish signal for the extinction of the downward trend, the probability of rolling back from him, and even change the trend.
But the trader must take into account other factors that increase the efficiency of MP - quick entry of this signal does not provide a high probability of a profitable trade. Ie professional market is not interested in any absorption, but only the model with additional features, reinforcing it.

Other variations and additions to the model of the absorption

Let us examine some of the important additions to the MP:

1. Superpogloschenie - in this case, the smaller the body of the first candle, the MP is considered more reliable. Is a very strong signal, when the size of the second candle is so great that her body absorbs not only the first candle, and even somewhat earlier.
2. Trend (trend) is a high priority and the most important factor that increases the strength of a magnetic field. The trader is better to search model that will signal the end of the correction of the main motion.
3. Also, you may receive a signal which will interrupt the absorption of the previous. This is a very strong signal. The bottom line: the original (primary) absorption - false. True - follow. For example, a bullish engulfing can be represented as 2 white candles and one black, sandwiched between them. Bearish - 2 black and 1 white candle, sandwiched between them. It is therefore recommended to wait for confirmation MF signal.
4. Tail (lower shadow) in the first MP. In this case we are dealing with certain combinations of candles. When bearish engulfing "tail" of the first candle is very similar to the model "shooting star" - added MP bearish "shooting star" amplifies the signal to sell. When bovine MP "tail" of the first candle is similar to the model of "hammer" when the amplified signal to buy.

Any additional factor that affects the magnetic field, is a kind of filter for the trader. In this case, candlestick analysis forex exchange becomes better, he more fully as to cut unnecessary entries into the market. Trader gets the most accurate and profitable point of opening positions.

There is also an indicator that allows you to automatically detect the magnetic field (see. Article "Indicator Price Action").

For trading on Forex, choose only reliable and time-tested broker.

Use the correct model of the absorption - you definitely will smile luck!