Bearish Engulfing Pattern

The first day of the Bearish Engulfing Pattern is characterized by a small body with the same color as the current trend.  The candlestick on the second day has a body that completely engulfs the previous day's body and is the opposite color.

Bearish Engulfing Pattern

The Bearish Engulfing Pattern candlestick formation is a bearish reversal pattern, appearing at the end of an uptrend. 


Bearish Engulfing Pattern Identification

The first day of the Bearish Engulfing Pattern is characterized by a small body with the same color as the current trend.  The candlestick on the second day has a body that completely engulfs the previous day's body and is the opposite color.

The second day opens higher than the previous days close, then it trades lower so by the end of the day, it will close below the previous days open. The Bearish Engulfing Pattern is the exact opposite that of the Bullish Engulfing Pattern.

Bearish Engulfing Pattern candlesticks

Interpretation of Bearish Engulfing Pattern

The Bearish Engulfing Pattern represents a change in investor sentiment, revealed on Day 2 when the sellers step in.  The bigger the previous days candle being engulfed, the more effective the new trend signal will be. Or the higher the open of the signal candle, then retreating downward to engulf the previous day,  the more powerful the next downtrend should be.  The signals work equally well when analyzing indexes as they do for individual stocks or any other trading entity.

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