1️⃣ Detect the trend

• Luis opens his H1 chart and sees that EMA50 has been above EMA200 for several days.

• The price mostly stays above EMA50 → Clear bullish trend ✅

2️⃣ Mark the zone

• Draw a horizontal line at the support of 1.0850 (the area where it previously bounced).

• Note that EMA50 is very close to that level, reinforcing the zone.

3️⃣ Wait for the pullback

• The price retraces from 1.0900 to 1.0852, touching the support zone + EMA50.

• Now, Luis waits for confirmation before entering.

4️⃣ Identify the confirmation candle

• A bullish engulfing appears:

• A small red candle followed by a large green candle that completely covers it.

• Close of the green candle = 1.0865.

5️⃣ Define entry and stop

• Entry: Buy stop at 1.0867 (2 pips above the high of the green candle).

• Stop-loss: 1.0847 (below the low of the engulfing) → 20 pips stop.

6️⃣ Calculate position size

1. Risk: 1% of $1,000 = $10

2. Stop: 20 pips

3. Pip value for 0.01 lots: $0.10

4. Formula: 10 ÷ (20 × 0.10) = 0.05 lots (5 microlots).

7️⃣ Set targets

• TP1: 1.0887 (R=1, +20 pips)

• TP2: 1.0907 (R=2, +40 pips)

• TP3: 1.0927 (R=3, +60 pips)

8️⃣ Execution and management

• The price activates the order on the next candle and rises quickly.

• TP1 is reached → Luis closes half and moves the stop to break-even.

• The price continues rising and hits TP2 → closes 25% more.

• The rest exits at TP3.

9️⃣ Result

• 50% at R=1 → +$5

• 25% at R=2 → +$5

• 25% at R=3 → +$7.5

• Total profit: $17.5 (1.75% of the account).

• Maximum risk taken: $10.

🔟 Journal entry

In the Backtest_Candlestick_Patterns.xlsx sheet, note:

• Date, asset, time frame.

• EMA50 > EMA200, pullback to EMA50, bullish engulfing pattern.

• Entry 1.0867, stop 1.0847, TPs, result +1.75R, +$17.5.

• Note: “Clean trend, perfect confluence EMA + support, no news.”