Correlation Trading, Engulfing Candle, Price Action

A short-timeframe forex strategy for AUD/USD and EUR/USD using correlation, engulfing candles, and partial profit-taking during the London session.

Published · Updated · Methodology: Price Action

Part of: Candlestick Patterns

  • Methodology: Price Action
  • Content type: strategy
  • Timeframes: 1-minute, 3-minute, 5-minute
  • Markets: AUD/USD, EUR/USD

Indicators used

  • Engulfing Candle
  • Price Action

Source video

Decoded from: Copia y Pega Esta Operación Ganadora by Fabian Alejandro Diaz — watch the original

Key timestamps:

  • 0:20 - Short-timeframe trading discussion (1, 3, 5-minute)
  • 0:50 - London session trading
  • 1:00 - Correlation analysis (AUD/USD vs EUR/USD)
  • 2:40 - Engulfing candle entry trigger
  • 3:30 - Stop loss placement
  • 4:00 - Take profit strategy (partial closes)
  • 6:30 - Stop loss adjustment based on structure

Strategy overview

An engulfing candle is a two-bar pattern in which one candle's body completely covers the previous one, read as an abrupt handover of control between buyers and sellers. What distinguishes this entry from the standard candlestick playbook is what sits in front of the trigger: before the pattern counts for anything, the video reads two correlated majors — AUD/USD and EUR/USD — against each other, using their relative behaviour as the context that decides whether a signal deserves attention at all.

That combination is the point. On the 1-, 3- and 5-minute charts this approach works on, a single engulfing bar is a very thin piece of evidence: intraday noise produces them constantly, and most say nothing about direction. Correlation is used here as the filter that thickens it — the idea being that a move showing up consistently across two pairs that normally travel together carries different information than a spike isolated to one chart. The video anchors all of this to the London session, the window where these pairs see their heaviest participation and where correlated behaviour is most readable.

The source is a Spanish-language walkthrough from Fabian Alejandro Diaz, titled "Copia y Pega Esta Operación Ganadora" — roughly, "copy and paste this winning trade" — and it is structured as a single trade shown end to end rather than a rulebook: the correlation read first, then the engulfing candle as the entry trigger, then stop placement, then a take-profit approach built on partial closes. This page catalogues those components and where the video addresses each; the walkthrough itself is where the trade is demonstrated in full.

Topics

correlation trading · engulfing candle strategy · price action trading · forex strategy · aud/usd strategy · eur/usd strategy · 1 minute strategy · 3 minute strategy · 5 minute strategy · scalping strategy · tradingview strategy · pine script · trading strategy · london session strategy

Frequently asked questions

What is correlation trading in forex?

Correlation trading uses the relationship between currency pairs that tend to move together — or in opposition — as context for a decision. Instead of judging a setup on one chart alone, the trader checks whether a second, correlated pair confirms or contradicts what the first one is showing.

Why compare AUD/USD and EUR/USD?

Both pairs are quoted against the US dollar, so they share a common driver and frequently move in the same direction. Watching them side by side is one way to separate a broad dollar move from something specific to a single pair, which is the distinction this video builds its entry context around.

How is an engulfing candle used as an entry trigger?

An engulfing candle marks the moment one side of the market overwhelms the other within a single bar, which is why it is commonly used as a timing signal rather than a directional forecast. In this approach it fires only after the correlation context has already been established — the pattern times the entry, it does not choose it.

Does this approach work on very short timeframes?

It is presented on the 1-, 3- and 5-minute charts during the London session, where activity is concentrated enough for short-timeframe structure to be meaningful. Low timeframes also carry more noise, so any approach built on them is worth testing on historical data before committing capital — Strategy Decoder catalogues strategies like this one from video sources so you can evaluate them yourself.

About this strategy page

This trading strategy was decoded by Strategy Decoder's AI from a public YouTube trading video and turned into a structured, reviewable specification. In the interactive app this page shows the full entry and exit logic, risk management settings, the indicators involved with their parameters, AlgoWizard-compatible logic and a Pine Script export ready for TradingView backtesting — plus an automated backtest verdict when one has been computed for this strategy.

Strategy Decoder catalogs 2,229 decoded strategies. Each one is extracted with confidence scoring, cross-linked to the indicators it uses, and kept up to date as new videos are processed daily. Load this page with JavaScript enabled to use the interactive tools, or start from the strategy explorer to filter by methodology, market and timeframe.

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