Constructing engulfing and star patterns from OHLC bars

Shared ticks, two graphic forms

Candlestick and bar displays encode the same session open, high, low, and close. Only the graphic form differs.

An OHLC session is one bar or candle built from a period open, high, low, and close. The open-close range is the interval between open and close used to construct most candlestick comparisons.

Editorial: once those two marks are read on an ordinary bar, the same two-session and three-session conditions can be marked on either display and treated as a falsifiable chart construction.

The engulfing cover is an open-close rule

A bullish engulfing construction after a decline is defined by the second session open-close range covering the first session open-close range. It is not defined by the second session exceeding the first session high-low range.

A bearish engulfing construction after an advance is the counterpart two-session cover: the later open-close range covers the earlier open-close range.

An engulfing pattern is that two-session reversal construction: after a directional move, the later open-close range covers the earlier open-close range.

Stars need a middle session and a later check

A morning star is a three-session bottoming construction after a decline. The middle session is the star. The third session is used as confirmation.

A doji star and gaps on both sides of the star are described as strengthening that construction.

An evening star is the three-session topping counterpart after an advance. The same doji-star and gap comments apply.

A star, in this usage, is the middle session of a three-session reversal that sits off the prior move and is later checked by a third session.

A doji is equal open and close

A doji is constructed when a session opens and closes at the same price. It is treated as indecision whose directional reading depends on the prior trend.

Two adjacent dojis are described as a stronger indecision cluster.

Match placement, not textbook high-low length

Pattern identity is defined by the relative placement of open and close marks, not by matching the exact high-low lengths of a textbook diagram.

The archive enumerates about 65 named candlestick constructions and describes them as roughly 75 percent reversals and 25 percent continuations.

Editorial: engulfing and star constructions belong with those reversal definitions as two-session and three-session hypotheses, not as a complete catalog.

Two named exceptions that use the prior high and low

Piercing-line and dark-cloud constructions are exceptions. They use the prior session high-low extremes plus a close through the midpoint of the prior open-close range.

Editorial: those two names are the reminder that most comparisons stay inside the open-close range, while a smaller set of constructions also needs the prior high and low.