Admin
April 05, 2020
The Bearish Engulfing is a strong bearish reversal pattern that signals a potential change in trend from bullish to bearish. It consists of two candles, with the second candle completely engulfing the first candle's body, indicating that the bears have taken control.
• A green (bullish) candle that represents a strong uptrend or upward momentum.
• This candle closes higher, showing that buyers are in control.
• A red (bearish) candle that engulfs the body of the first candle completely (the open and close of the second candle are outside the range of the first).
• The second candle opens higher than the first candle’s close and closes lower than the first candle’s open, showing that the sellers have overwhelmed the buyers.
✅ The second candle must completely engulf the body of the first candle.
✅ The first candle is bullish (green), and the second candle is bearish (red).
✅ Appears at the top of an uptrend, signaling a potential trend reversal.
✅ The bearish engulfing candle should be of significant size, ideally larger than the first candle.
• The first bullish candle indicates that buyers are in control and the price is rising.
• The second bearish candle engulfs the first one, showing that sellers have overtaken the market and are pushing the price lower, signaling a potential reversal or trend change.
• The complete engulfing of the first candle by the second is a powerful indication of a shift in momentum from bulls to bears.
📌 Entry: After the second bearish candle closes below the first candle's low, confirming the reversal.
📌 Stop-loss: Above the high of the first candle or the second candle (depending on risk tolerance).
📌 Target: Next resistance level or based on a risk-reward ratio (e.g., 1:2).
The Bearish Engulfing is a strong reversal pattern and is more effective when confirmed by high volume and appears at key resistance levels.