The Sandwich Trade Setup
The sandwich trade is made up of multiple candles and involves an engulfing
bar. It forms by the market going up or down sharply and then having multiple
small bars follow it. After those small bars a bigger bar engulfs the previous
small bars. This essentially forms a sandwich and you will get a better idea of
what it looks like.
It can act as a reversal signal
or a continuation signal depending on whether the 2nd big bar is bullish or
bearish.
What a Sandwich Trade Looks Like
The diagram below shows a
bullish sandwich trade, notice how the price drops sharply down then it is
followed by a couple small bars. Then an engulfing bar consumes all of the
small bars since the sharp price drop. This is a simple example of
a sandwich trade.
