Bullish and bearish engulfing candles warn of trend change before it happens.
The Bearish Engulfing pattern is a major reversal pattern comprised oftwo opposite colored bodies.The Bearish Engulfing Pattern is formed after an uptrend.Itopens higherthan the previous day’s close and closes lower than the previous day’s open. Thus, the black candle completely engulfs the previous day’s white candle. Engulfing can include either the open or the close be equal to the open or close ofthe previous day, but not both.
This pattern is the converse of a bullish engulfing pattern, wherein the body of a bullish candle is encompassed by the body of a consequent bullish candle. This indicates an increase in activity from both bears and bulls, and a shift of market sentiment towards bearishness. As we have observed with other patterns, the context of the trend is critical; a bearish engulfing pattern is most indicative of the onset of a bearish price move when it appears in the midst of an uptrend.