Candle -- Engulfing Reversal Trader

This is a template. The default signal detects engulfing reversal patterns in crypto 5-minute interval markets and trades the post-engulfing continuation using conviction-based sizing. The skill handles all the plumbing (interval parsing, engulfing detection, trade execution, safeguards). Your agent provides the alpha.

Strategy Overview

Polymarket lists 5-minute interval markets for BTC, ETH, SOL, and XRP: "Will Bitcoin be Up or Down in the 10:50AM-10:55AM ET interval?" These resolve to YES (up) or NO (down) based on the actual price movement. An engulfing pattern occurs when one interval completely reverses the prior interval with stronger conviction. If interval N was DOWN (p=42%) and interval N+1 is UP (p=58%), and the UP move is larger than the DOWN move, that is a bullish engulfing -- one of the strongest reversal signals in candlestick analysis. The NEXT interval after the engulfing pair should continue the reversal direction.

Edge

Unlike momentum or mean-reversion strategies that look at extended streaks, the engulfing pattern targets a specific two-bar structure that signals a decisive shift in market sentiment. The edge arises because:

1. Conviction asymmetry -- the engulfing interval does not merely reverse the prior direction; it does so with GREATER conviction, indicating that the new direction has stronger backing
2. Reversal confirmation -- a single reversal could be noise, but an engulfing (where the reversal is larger than the original move) statistically predicts continuation in the new direction
3. Systematic underpricing -- the post-engulfing interval is often priced near 50% because participants are uncertain whether the reversal will hold; the engulfing pattern provides evidence that it will
4. Bundle independence -- each 5-minute interval resolves independently, so the engulfing signal from intervals N and N+1 provides informational (not mechanical) alpha for interval N+2

Signal Logic