I've heard people say "watch for an engulf candle before a breakout" but I'm not sure how that works in practice. Is it just about momentum confirmation or is there more to it?
Good question. When traders talk about an engulf candle (https://fbs.com/fbs-academy/traders-blog/understanding-bullish-engulfing-patterns-examples-and-implications) before a breakout, they usually mean that the market gave a strong signal of momentum shift. For instance, if price consolidates near resistance and then prints a bullish engulfing that breaks the last few candles' highs, that can indicate buyers stepping in early. I often see this on 30M and 1H charts — especially after failed breakdowns. It's a nice clue that price might finally punch through the level. It's not a guarantee, of course, but it adds conviction when paired with rising volume and a clean structure.
That's actually really helpful. I didn't realize it was more about the setup than the candle itself. I'll try to spot those failed breaks next time. Thanks a lot!