Stock Market · Technical Analysis

Engulfing patterns

What is an engulfing pattern?

An engulfing pattern is a two-candle reversal signal. The second candle's body completely 'engulfs' the first candle's body. It's bigger and swallows it entirely.

Bullish Engulfing

Setup: Appears after a downtrend.

1. Day 1: A red (bearish) candle, sellers in control

2. Day 2: A large green candle that opens below Day 1's close and closes above Day 1's open

> The bulls not only erased the previous day's losses. They went further. This shows a powerful shift.

This is one of the most reliable reversal signals in technical analysis when it appears after a sustained downtrend, near support.

Bearish Engulfing

Setup: Appears after an uptrend.

1. Day 1: A green (bullish) candle, buyers in control

2. Day 2: A large red candle that opens above Day 1's close and closes below Day 1's open

Bears swallowed everything the bulls gained the day before. Strong signal to expect further selling.

Making it stronger

Engulfing patterns are more reliable when:

• They appear after a prolonged trend (not just 2–3 days)
• They occur near key support or resistance levels
• The engulfing candle has high volume
• The engulfing candle is significantly larger than the first

2 candlesis all it takes to flip the narrative of a trend

Takeaway. Bullish engulfing after downtrend = potential reversal up. Bearish engulfing after uptrend = potential reversal down.