| PART | Section | Description | ||
|---|---|---|---|---|
| 1 | INTRODUCTION | Product introduction, what the product helps you with | ||
| 2 | INSTALLATION & SETUP | System requirements, step-by-step installation guide | ||
| Guide to Installing Free Indicators and EAs Included with the Mirage Trading System Purchase | ||||
| 3 | INTERFACE DISPLAY | Explanation of the components displayed on the chart | ||
| User Guide: Trading Lines & Signal Tracking System | The system automatically draws Entry, Stop Loss, and Take Profit lines (TP 1–4) on the chart, tracks price action for hits, records Win/Loss results, and displays real-time performance statistics. | |||
| User Guide : Visualization, Zone Fill, Signal Dashboard & Cancelled Signals | When you attach an indicator to a chart, the system renders the following visual components for each detected signal | |||
| User Guide: MTF SCAN & Dashboard User Guide | MTF SCAN automatically scans all Market Watch symbols across 8 timeframes (M1 to W1) and displays results on a Dashboard grid directly on your chart. | |||
| User Guide : Chart Theme User Guide | Chart Theme is a feature that changes the entire chart color scheme in MetaTrader 5 — including the background, candles, grid, text, and Bid/Ask lines — with a single click. | |||
| 4 | CORE CONCEPTS | Fundamental concepts that the system is built upon | ||
| User Guide: Market Structure Functionality in the Trading System | Identifies trend direction (Uptrend, Downtrend, Ranging) by analyzing swing highs/lows, and detects key events: BOS (trend continuation) and CHoCH (potential trend reversal). | |||
| User Guide : Signal Types, States, and Lifecycle | A signal is the system's notification when it detects a qualifying candlestick pattern on the chart. Each signal tells you the expected price direction and provides suggested entry, stop loss, and take profit levels. | |||
| 5 | SIGNAL FILTERS | Filters that refine and validate trading signals | ||
| User Guide: Trade Direction (Direction Filter) in the Trading System | Defines the allowed trading direction (Buy only, Sell only, both, or neither) as the first filter before searching for entry signals, based on current market trend. | |||
| User Guide: Signal Zone Filter in the Trading System | Eliminates signals not near important price zones, retaining only those connected to market structures (swing high/low, BOS, CHoCH) to reduce noise. | |||
| User Guide: StoplossHunt Filter User Guide — Filtering "SL Sweep" Signals | Identifies higher-probability signals by checking whether price "swept stoploss" before forming a pattern. | |||
| User Guide : Extreme Zone Filter | Extreme Zone Filter is a signal filtering feature that helps avoid entering trades when price is at the top or bottom of a Donchian price channel. | |||
| User Guide: Opposite Signal Filter | The Opposite Signal Filter is an automatic feature that prevents new signals from appearing when you already have an active trade running in the opposite direction.The principle is very simple: Don't buy when you're selling. Don't sell when you're buying. | |||
| User Guide : Quality Filter User Guide | Quality Filter is a feature that helps you receive only the best signals — price patterns formed clearly, with balanced proportions and high reliability — and reject weak signals, dull patterns, and those below standard. | |||
| 6 | TRADE MANAGEMENT | |||
| User Guide : Risk/Reward & SL Method User Guide | Risk/Reward (R:R) is the ratio between the amount of money you accept losing (Risk) and the amount of money you expect to gain (Reward) in a single trade. | |||
| User Guide: Trailing Stop Loss (TSL) User Guide | Regular Stop Loss (SL) stays fixed in one place. You set SL at 1990.00, and it stays there forever — even if price has risen to 2030.00.Trailing Stop Loss (TSL) is different. It automatically moves in your favor when price advances. As price moves up, TSL moves up with it. When price stalls or reverses, TSL holds the best position it reached. | |||
| 7 | CONFIGURATION PARAMETERS GUIDE | Detailed guide to each configuration parameter | ||
| SIGNAL SCANNING CONFIGURATION GUIDE - MIRAGE TRADING SYSTEM EA | Guide to mastering signal scanning settings within the Inputs tab, optimizing trade discovery on a single chart or across the entire market. | |||
| 8 | ALERTS & NOTIFICATIONS | |||
| User Guide: Alerts & Notifications User Guide | Configure push notifications, and on-screen popups when new signals are detected. | |||
| 9 | SYSTEM RISKS & LIMITATIONS | Notes on system risks and limitations |
1. INTRODUCTION
Engulfing Trading System2-Bar Power Reversal — Complete Body Engulfment Detection
Author: Ich Khiem Nguyen | MQL5: https://www.mql5.com/en/users/khiemni/seller
What is Engulfing Trading System?
Engulfing Trading System helps you spot Bullish and Bearish Engulfing patterns on your MetaTrader 5 charts — automatically. The indicator scans every candle, filters out weak setups, and shows you only the best trading opportunities with clear entry points, stop losses, and profit targets already calculated. It works on any market and any timeframe, giving you more time to focus on your trading decisions instead of searching for patterns.
What Are Engulfing Patterns?
Engulfing patterns are powerful 2-bar reversal patterns that appear when market momentum shifts dramatically from one direction to the other. The defining characteristic is that the second candle's body completely wraps around (engulfs) the first candle's body — a visual display of one side overwhelming the other.
Bullish Engulfing (Bullish Reversal)
A Bullish Engulfing appears at the bottom of a downtrend. The first candle (setup) is a bearish candle showing sellers are still pushing price down. Then the second candle (engulfing) opens below the setup candle's close and closes above the setup candle's open — its body completely wraps the first candle's body. This dramatic shift shows buyers have taken over with force, signaling a potential trend reversal upward.
Bearish Engulfing (Bearish Reversal)
A Bearish Engulfing appears at the top of an uptrend. The first candle (setup) is a bullish candle showing buyers are still pushing price up. Then the second candle (engulfing) opens above the setup candle's close and closes below the setup candle's open — completely wrapping the first candle's body. This shows sellers have overwhelmed buyers in a single session, signaling a potential trend reversal downward.
When you see these patterns forming near important support or resistance levels, they become even more reliable signals for potential trend reversals.
How the Indicator Finds Patterns
The indicator scans your charts in real-time and checks each potential pattern against multiple quality requirements:
- Checks that both candles have meaningful bodies (not doji or spinning tops) to confirm decisive market participation
- Verifies the engulfing candle's body completely wraps the setup candle's body — opening beyond one extreme and closing beyond the other
- Measures the engulfing candle's strength relative to recent volatility (ATR) to filter out insignificant moves
- Optionally checks for trend context using a simple moving average to confirm the pattern appears after a directional move
Only patterns that pass all these checks appear on your chart, so you don't waste time on weak or invalid setups.
Quality Score — How Good Is the Pattern?
Every pattern gets a quality score from 0% to 100%, like a grade on a test. This helps you focus on the best trading opportunities.
What the Score Means
The indicator evaluates four key factors to grade each Engulfing pattern. How much larger is the engulfing body compared to the setup body? How strong is the engulfing candle relative to recent volatility? Where did the engulfing candle close within its range? And does the pattern appear in a meaningful trend context? Patterns with larger engulfing ratios, strong momentum, and clear trend context receive higher scores.
| Grade | Score Range | Quality Level |
|---|---|---|
| A | 80-100% | Excellent — Best signals |
| B | 60-79% | Good — Reliable setups |
| C | 40-59% | Average — Needs confirmation |
| D | 20-39% | Below Average — Risky |
| F | 0-19% | Poor — Avoid |
Quality Threshold Setting
By default, the indicator only shows patterns scoring 30% or higher. You can adjust this in the settings:
- Raise to 50-60%: See only the best signals (fewer but higher quality)
- Lower to 15-20%: See more signals (more frequent but mixed quality)
- Tip: Start with the default 30% and adjust based on your backtest results
What You See on the Chart
When the indicator detects an Engulfing pattern, it draws everything you need to know directly on the chart:
Signal Markers
- Arrow icons: A green upward arrow appears below bullish engulfing patterns; a red downward arrow appears above bearish engulfing patterns
- Quality labels: The quality score percentage (e.g., "78%") is displayed next to each signal arrow
Trading Lines
- Entry line: A blue horizontal line at the engulfing candle's high (bullish) or low (bearish), or at the close price in aggressive mode
- Stop Loss line: A red horizontal line below the pattern low (bullish) or above the pattern high (bearish), with pip distance label
- Take Profit lines: Up to 4 green lines (TP1-TP4) at configurable R:R ratios, each with pip distance and R:R labels
Visual Zones
- Pattern highlight: A shaded rectangle covers the pattern area, green for bullish and red for bearish setups
- Tracking dots: Small dots trace the price path after a signal is detected, changing color as the signal progresses through its lifecycle
Signal Lifecycle
Signals progress through different states, shown by changing colors and tracking dots:
- Pending: Pattern just detected, waiting for entry confirmation
- Triggered: Entry price reached, trade is active
- Target Hit: Price reached take profit level (signal turns green)
- Stop Hit: Price hit stop loss (signal turns red)
- Cancelled: Signal invalidated before entry (signal disappears or grays out)
You can watch your signals evolve in real-time without opening any menus or panels.
Settings You Can Adjust
Here are the main settings that control how the indicator finds and displays Engulfing patterns:
| Setting | What It Does | Default | When to Change It |
|---|---|---|---|
| ATR Period for volatility | Controls how many bars are used to measure market volatility | 14 | Rarely needs changing; lower for faster-moving markets |
| Max Bars to Scan (history depth) | How far back in history to look for patterns | 3000 | Increase to see more historical signals, decrease for faster loading |
| Min Bars Between Patterns | Minimum gap between consecutive signals | 3 | Increase if signals cluster too close together |
| Min Body/Range (both bars, filter doji 0.20=20%) | Minimum body size relative to candle range for both candles | 0.20 | Lower to accept more doji-like candles, raise to require stronger bodies |
| Min Engulfing Body/ATR (significance, 0.30=standard) | How large the engulfing body must be relative to ATR | 0.30 | Raise for stronger signals only, lower if signals are too rare |
| Min Setup Body/ATR (0.15=relaxed) | Minimum setup candle body size relative to ATR | 0.15 | Raise to require larger setup candles, lower for more signals |
| Require Trend Bars Before Pattern (0=disable) | Number of same-direction bars required before the pattern | 0 | Set to 2-3 to require clear trend context before patterns |
| Entry Mode | Aggressive (enter at close) or Conservative (enter at breakout) | Conservative | Use Aggressive for earlier entries, Conservative for confirmation |
| Entry Buffer (xATR, conservative breakout) | Buffer added to entry price in conservative mode | 0.05 | Increase for wider entry buffer, decrease for tighter entries |
| SL Buffer (xATR above/below pattern) | Extra space added to stop loss beyond pattern extreme | 0.10 | Increase in volatile markets, decrease for tighter stops |
| Trend SMA Period (0=disable) | SMA period for trend direction filter | 0 | Set to 20-50 to only show patterns aligned with SMA trend |
| Min Quality (0.0-1.0, 0.30=relaxed) | Minimum quality score threshold to display a signal | 0.30 | Raise to see fewer but higher quality signals |
Settings Tips
- Start with all default settings and let the indicator run for a few days to see how it performs
- The Entry Mode setting is unique to this indicator — try Conservative first for safer entries with breakout confirmation
- If you get too many signals, raise the quality threshold to 50% or enable the trend filter (set Trend SMA Period to 20)
- Always backtest any setting changes before using them on a live account
Best Timeframes and Markets
Recommended Timeframes
| Timeframe | Signal Quality | Signal Frequency | Best For |
|---|---|---|---|
| M15 | Good | High | Scalping, quick reversals |
| H1 | Very Good | Moderate | Day trading, intraday swings |
| H4 | Excellent | Low-Moderate | Swing trading, position entries |
| D1 | Excellent | Low | Swing/position trading, major reversals |
Best Markets
- XAUUSD (Gold): Excellent pattern clarity on H1 and H4 timeframes — engulfing patterns are especially effective on gold due to its strong momentum moves
- EURUSD, GBPUSD, USDJPY: Work well on all timeframes above M15 — major pairs provide clean engulfing formations
- US30, NAS100: Best results on H4 and Daily timeframes where institutional participation creates clear engulfing moves
- Cryptocurrency (BTCUSD, ETHUSD): Use H4 or Daily timeframe for clearer signals — lower timeframes tend to be noisy
The indicator works on any symbol and timeframe, but these combinations tend to produce the most reliable signals.
Getting Started — Quick Setup
Follow these steps to start using Engulfing Trading System:
- Open MetaTrader 5 and load your preferred chart (we recommend starting with XAUUSD on H1)
- In the Navigator panel (Ctrl+N), expand "Indicators" and find "Engulfing Trading System"
- Drag the indicator onto your chart
- A settings window appears — click OK to use the default settings for your first session
- Watch for signal arrows and trading lines to appear as the indicator scans your chart history
- After observing a few signals, adjust the Quality Threshold or Entry Mode based on your trading style
- Enable push notifications in Settings > Alerts if you want mobile alerts for new signals
That's it! The indicator is now scanning your charts automatically and will alert you when high-quality Engulfing patterns appear.
All Features at a Glance
Pattern-Specific Features
- ✓ Complete body engulfment detection with automatic bullish/bearish classification
- ✓ 4-factor weighted quality scoring: engulf ratio, body/ATR, close position, trend context
- ✓ Dual entry mode system: Conservative (breakout) or Aggressive (close) with configurable buffer
- ✓ Pattern-adaptive stop loss placement at pattern extreme with ATR buffer
- ✓ Optional trend filter via SMA to align signals with prevailing trend direction
The following professional-grade features are available across all our indicators:
| 3 | INTERFACE DISPLAY | Explanation of the components displayed on the chart | ||
| User Guide: Trading Lines & Signal Tracking System | The system automatically draws Entry, Stop Loss, and Take Profit lines (TP 1–4) on the chart, tracks price action for hits, records Win/Loss results, and displays real-time performance statistics. | |||
| User Guide : Visualization, Zone Fill, Signal Dashboard & Cancelled Signals | When you attach an indicator to a chart, the system renders the following visual components for each detected signal | |||
| User Guide: MTF SCAN & Dashboard User Guide | MTF SCAN automatically scans all Market Watch symbols across 8 timeframes (M1 to W1) and displays results on a Dashboard grid directly on your chart. | |||
| User Guide : Chart Theme User Guide | Chart Theme is a feature that changes the entire chart color scheme in MetaTrader 5 — including the background, candles, grid, text, and Bid/Ask lines — with a single click. | |||
| 4 | CORE CONCEPTS | Fundamental concepts that the system is built upon | ||
| User Guide: Market Structure Functionality in the Trading System | Identifies trend direction (Uptrend, Downtrend, Ranging) by analyzing swing highs/lows, and detects key events: BOS (trend continuation) and CHoCH (potential trend reversal). | |||
| User Guide : Signal Types, States, and Lifecycle | A signal is the system's notification when it detects a qualifying candlestick pattern on the chart. Each signal tells you the expected price direction and provides suggested entry, stop loss, and take profit levels. | |||
| 5 | SIGNAL FILTERS | Filters that refine and validate trading signals | ||
| User Guide: Trade Direction (Direction Filter) in the Trading System | Defines the allowed trading direction (Buy only, Sell only, both, or neither) as the first filter before searching for entry signals, based on current market trend. | |||
| User Guide: Signal Zone Filter in the Trading System | Eliminates signals not near important price zones, retaining only those connected to market structures (swing high/low, BOS, CHoCH) to reduce noise. | |||
| User Guide: StoplossHunt Filter User Guide — Filtering "SL Sweep" Signals | Identifies higher-probability signals by checking whether price "swept stoploss" before forming a pattern. | |||
| User Guide : Extreme Zone Filter | Extreme Zone Filter is a signal filtering feature that helps avoid entering trades when price is at the top or bottom of a Donchian price channel. | |||
| User Guide: Opposite Signal Filter | The Opposite Signal Filter is an automatic feature that prevents new signals from appearing when you already have an active trade running in the opposite direction.The principle is very simple: Don't buy when you're selling. Don't sell when you're buying. | |||
| User Guide : Quality Filter User Guide | Quality Filter is a feature that helps you receive only the best signals — price patterns formed clearly, with balanced proportions and high reliability — and reject weak signals, dull patterns, and those below standard. | |||
| 6 | TRADE MANAGEMENT | |||
| User Guide : Risk/Reward & SL Method User Guide | Risk/Reward (R:R) is the ratio between the amount of money you accept losing (Risk) and the amount of money you expect to gain (Reward) in a single trade. | |||
| User Guide: Trailing Stop Loss (TSL) User Guide | Regular Stop Loss (SL) stays fixed in one place. You set SL at 1990.00, and it stays there forever — even if price has risen to 2030.00.Trailing Stop Loss (TSL) is different. It automatically moves in your favor when price advances. As price moves up, TSL moves up with it. When price stalls or reverses, TSL holds the best position it reached. | |||
| 7 | CONFIGURATION PARAMETERS GUIDE | Detailed guide to each configuration parameter | ||
| SIGNAL SCANNING CONFIGURATION GUIDE - MIRAGE TRADING SYSTEM EA | Guide to mastering signal scanning settings within the Inputs tab, optimizing trade discovery on a single chart or across the entire market. | |||
| 8 | ALERTS & NOTIFICATIONS | |||
| User Guide: Alerts & Notifications User Guide | Configure push notifications, and on-screen popups when new signals are detected. |
Common Questions
Q: Why does the stop loss seem wide on some signals?
The indicator places the stop loss beyond the pattern's extreme (low for bullish, high for bearish) plus an ATR buffer. Wide-range engulfing patterns naturally produce wider stops. You can switch the SL Method to Donchian Channel for structure-based stops, or reduce the SL Buffer setting for tighter placement — but be aware this may increase false stop-outs.
Q: What's the difference between Conservative and Aggressive entry mode?
Conservative mode places a pending order at the engulfing candle's high (bullish) or low (bearish) plus a small ATR buffer — you only enter if price confirms the direction. Aggressive mode enters at the engulfing candle's close price, giving you earlier positioning but without breakout confirmation. Start with Conservative if you prefer safer entries.
Q: How do I reduce the number of signals?
Three options: (1) Raise the Min Quality threshold from 0.30 to 0.50 or higher. (2) Set Require Trend Bars to 2-3 so patterns must appear after a clear trend. (3) Enable the Trend SMA filter (set period to 20) to only show signals aligned with the moving average direction.
Q: How is Engulfing different from the Dark Cloud / Piercing pattern?
Engulfing requires the second candle's body to completely wrap the first candle's body — opening beyond and closing beyond both extremes. Dark Cloud and Piercing only require the second candle to penetrate past the midpoint of the first candle. Engulfing is generally considered a stronger reversal signal because of the complete body engulfment.
Q: Can I use this indicator with an Expert Advisor?
Yes. The indicator exposes 10 signal buffers (Direction, Entry, SL, TP1-4, Quality, Signal ID) that any EA can read via iCustom(). See the EA Signal Buffers user guide for connection details and a ready-to-use EA template.
What's New — Version 1.00
This is the v1.00 release of Engulfing Trading System. Key features include:
- Automatic Bullish and Bearish Engulfing pattern detection on all timeframes
- 4-factor weighted quality scoring (engulf ratio, body/ATR, close position, trend context)
- Dual entry mode: Conservative (breakout confirmation) and Aggressive (candle close)
- 7-layer signal filter chain (quality, extreme zone, direction, SL hunt, signal zone, spacing, opposite)
- Multi-timeframe scanner monitoring up to 150 symbols across 8 timeframes
- Donchian Channel trailing stop with breakeven lock and dynamic adjustment
- 4-channel alert system (popup, sound, push, email) with anti-spam protection
- Market structure analysis with BOS/CHOCH detection and swing labeling
- 4 chart themes (Dark Muted, Dark, Light, Custom)
- 10 EA signal buffers for algorithmic trading integration
Getting Help
If you have questions or need support:
- Documentation: Check the detailed user guides linked in the Features section above
- MQL5 Profile: https://www.mql5.com/en/users/khiemni/seller
- Direct Contact: Message me through MQL5 for technical support
I'm committed to helping you get the most out of this indicator.
Ready to Start?
Engulfing Trading System is designed to save you time and help you find high-probability Engulfing patterns automatically. Attach the indicator to your chart and start with the default settings — you can fine-tune everything later as you get comfortable with how it works.
Happy trading!
Ich Khiem Nguyen
Engulfing Trading System v1.00 — Created February 2026
