Engulfing Pattern

The Engulfing pattern consists of two candles, where the body of the first candle is completely "engulfed" by the body of the second candle.

Engulfing patterns offer traders a method to enter the market with the expectation of a potential trend reversal.

This reversal candlestick pattern can be either bearish or bullish, depending on whether it occurs at the conclusion of an uptrend or downtrend.

The formation of the pattern includes two candles. The first candle features a small body, followed by a larger candle whose body entirely engulfs the body of the first candle.

There are two types of engulfing candlestick patterns:

• Bullish Engulfing pattern
• Bearish Engulfing pattern

The Bullish Engulfing pattern delivers the strongest signal when it appears at the bottom of a downtrend, indicating a rise in buying pressure.

This pattern often leads to a reversal of the current trend as more buyers enter the market, pushing prices higher.

The pattern consists of two candles, with the second candle fully engulfing the body of the first candle.

Conversely, the Bearish Engulfing pattern is the opposite of the Bullish Engulfing pattern.

It provides the strongest signal when it appears at the peak of an uptrend, indicating a rise in selling pressure.

The Bearish Engulfing pattern frequently triggers a reversal of the existing trend as more sellers enter the market, driving prices lower.

This pattern also involves two candles, with the second candle completely engulfing the body of the first candle.

Traders can look to capitalize on engulfing patterns by waiting for confirmation of the move. This involves monitoring price action after the pattern has formed to see if the price continues in the anticipated direction.