Engulfing is a VertexFX client side VTL indicator which help traders predicting "Bullish Engulfing" or "Bearish Engulfing" in candlestick pattern on all timeframes. Bullish engulfing bar is formed when candle whose body, the open and close engulfs the previous candle’s body. Conversely, a bearish engulfing pattern is characterized by a bearish candle whose body engulfs the previous candle’s body.

A bullish engulfing candlestick can show you a massive shift in its volume. It is the exact same thing in reverse for a bearish engulfing pattern. If you get a bearish engulfing candlestick at the top of a recent rise, be aware it could be a point where trend has changed. These types of patterns are usually formed from unexpected news or events surrounding a stock, or an economic change (such as interest rates) may have an dramatic reversal effect on currencies and commodities prices.

Method of calculation of the indicator:

If the following condition
High[i-1]lower than High [i] & Low[i-1]lower than Close[i] & Open[i-1]lower than Close[i-1]lower than & Open[i] higher thanClose[i] -

This means that the market formed a bearish engulfing. Then on the chart the indicator will dispaly a sell signal in the form of red arrows.
If the following condition
Low[i-1]not equal to Low[i] & High[i-1]lower than lower than Close[i] & Open[i-1]lower than higher thanClose[i-1]lower than & Open[i] lower than Close[i]
This means that the market formed a bullish engulfing. Then on the chart shows a buy signal in the form of arrows green.

http://hybrid-solutions.com/plugins/...engulfing.html