Courses / Candlestick Patterns Masterclass

Bullish and Bearish Engulfing

A candle whose body fully covers the previous one shows a shift in control.

A bullish engulfing candle opens below the previous bearish close and closes above its open, covering the whole body. A bearish engulfing is the mirror image.

The larger the engulfing candle compared with recent candles, and the closer to a key level, the more meaningful it is.

Entry is often on the close of the engulfing candle or a small retrace, with the stop beyond its far end.

Key takeaways

• Body must fully cover the prior body
• Bigger candle at a key level = stronger signal
• Stop beyond the engulfing candle

Quiz

• A bullish engulfing candle: Answer: Covers the prior bearish body. Its body engulfs the prior one.
• Which makes an engulfing candle stronger? Answer: It forms at support after a fall. Location and size add weight.
• Where is the stop for a bullish engulfing long? Answer: Below the low of the engulfing candle. A break of its low invalidates it.

Educational content, not financial advice.