Engulfing Pattern
The Engulfing pattern is formed by two candles, where the body of the
first candle is “engulfed” by the body of the second candle.
Engulfing patterns provide an approach for traders to enter the market
in anticipation of a possible trend reversal.
An engulfing pattern is a reversal candlestick pattern that can be
bearish or bullish depending upon whether it appears at the end of an
uptrend or downtrend.
The pattern formation consists of two candles.
The first candle is characterized by a small body, followed by a taller
candle whose body completely engulfs the previous candle’s body.
There are two types of engulfing candlestick patterns:
1. Bullish Engulfing pattern
2. Bearish Engulfing pattern
The Bullish Engulfing pattern provides the strongest signal when
appearing at the bottom of a downtrend and indicates a surge in
buying pressure.
The bullish engulfing pattern often triggers a reversal of an existing
trend as more buyers enter the market and drive prices up further.
The pattern involves two candles with the second candle
completely engulfing the body of the first candle.
The Bearish Engulfing pattern is simply the opposite of the Bullish
Engulfing pattern.
It provides the strongest signal when appearing at the top of an
uptrend and indicates a surge in selling pressure.
The Bearish Engulfing pattern often triggers a reversal of an existing
trend as more sellers enter the market and drive prices down further.
The pattern involves two candles with the second candle
completely engulfing the body of the first candle.
Traders can look to trade engulfing patterns by waiting for
confirmation of the move. This is done by observing price action after
the pattern has formed and seeing if the price continues in the
expected direction.
Related Terms
Bearish Engulfing Pattern
The Bearish Engulfing pattern is a two-candlestick pattern that consists of an up (white or
green) candlestick followed by a large down (black or red) candlestick that surrounds or
“engulfs” the prior candle.
Harami
The Harami pattern consists of two candlesticks with the first candlestick being a large
candlestick and the second being a small candlestick whose body is contained within the
first candle’s...
Bullish Engulfing Pattern
A Bullish Engulfing Pattern is a two-candlestick reversal pattern that forms when a small
black candlestick is followed the next day by a large white candlestick, the body of which
completely...
Dark Cloud Cover
Dark Cloud Cover is a two-candlestick pattern that is created when a down (black or red)
candle opens above the close of the prior up (white or green) candle, then closes below the
midpoint of the...
Chart Pattern
A chart pattern is a graphical presentation of price movement by using a series of trend lines
or curves. Chart patterns can be described as a natural phenomenon of fluctuations in the
price of a...
