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Let me try and use this old RTM picture to try to explain the subject of engulfs and how it relates to
FTR/FL, and how it is similar to other methods, but at the same time different.

Supposing we have a price structure/movement like this and we want to analyse

Most traditional methods employ a break of structure and retest methodology. The basic principle being
that the trader looks for a break of structure, waits for a retrace back to some good level
(support/resistance/demand/supply/OB, etc) and executes a trade in the direction of the structure
break
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So for the chart, we can see a break of structure (BOS) marked by the small red horizontal line. The
trader waits for retrace to some good level marked by the black box and executes the buy trade.

In this case, the trade fails as price fails to respect the black box

Next, price continues to move and the trader sees another opportunity. A BOS to the upside marked by
the small horizontal line in this chart. Again the trader waits for retrace to some good level to buy. But it
fails again as price fails to respect the black box
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Next, price continues to move and the trader again looks for a BOS to the upside and waits for retrace to
some good level to buy and when price hits black box, the trader buys again in the direction of the BOS.

This time the trade works!

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The subject of engulf is similar, but it is a little complicated. When we look for engulfs, we are actually
looking for a BOS into space (unhabited terrritory or no man's land)

So let us go over the price movement again and review the previous posts, but this time with the engulf
in mind

So for the chart, we can see a break of structure (BOS) marked by the small red horizontal line. The
trader waits for retrace to some good level marked by the black box and executes the buy trade.

In RTM, we can also see the BOS, but we are thinking and asking, 'is it a BOS into space'? In this chart
we see the BOS, but we can see that price did hit a small green rectangle formed on the break of the
green horizontal line. In this case, we do not consider the engulf to be valid, or we say that the engulf
has hit its target or we say that it is not a useful engulf. We cannot buy at the black box below because
we do not have PA.
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So moving on, price continues to move and we see another BOS which we discussed before. But again,
we see that price did hit the small green box formed on the break of the green horizontal line. We
cannot buy at the black box below since we do not have useful engulf. Again, we do not have PA.
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So moving on, price continues to move and we see another BOS. This time however, we see that that
price broke the lower green box formed on the break of lower green line. We also see that the
BOS/engulf is into space, as there is nothing directly in the way of price. Thirdly we see an upper zone
(upper green box formed on the break of upper green line), and we see that the engulf did NOT hit that
upper zone.

This is what is called an engulf, or a useful engulf or an engulf into space and it is the real tradeable PA.

In this case price then retraced to some lower level from where the buy trade can be executed. The
upper green box is called the target.

For completeness, we would usually draw the lower zone (represented by the red box) from where price
is coming. Our stop would be below this box.
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