Bullish Engulfing Pattern

The first day of the Bullish Engulfing Pattern is characterized by a small body of the same color as the current trend, followed by a day whose body completely engulfs the previous day's body.

Bullish Engulfing Pattern

The Bullish Engulfing Pattern candlestick formation is a bullish reversal pattern, appearing at the end of a downtrend. 


Bullish Engulfing Pattern Identification

The first day of the Bullish Engulfing Pattern is characterized by a small body of the same color as the current trend, followed by a day whose body completely engulfs the previous day's body.

The second day opens lower than the previous days close, then it trades higher. By the end of the day it will be above the previous days open

Bullish Engulfing Pattern candlestick

Interpretation of Bullish Engulfing Pattern

The Bullish Engulfing Pattern represents a complete change in investor sentiment. Using this pattern as a buy signal eliminates the need to grab for the fallen knife.  The Bullish Engulfing pattern reveals when the buyers have stepped in.

The bigger the previous days candle being engulfed, the more effective the new trend signal will be. Or the lower the open of the white candle, then coming back up to engulf the previous day, the more powerful the next advance 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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