Bearish · Bearish Reversal

Bearish Engulfing Candlestick Pattern

A bearish engulfing pattern is a two-candle bearish reversal where a small green candle is followed by a larger red candle whose body completely engulfs it, appearing after an uptrend.

What the Bearish Engulfing pattern means

The second candle opening at or above the prior close and closing below the prior open shows sellers decisively took control and overwhelmed the previous period's buyers. After an uptrend, that shift signals a potential top, especially on rising volume.

How the Bearish Engulfing is traded

→Enter short on a close below the engulfing candle, or manage existing longs out.
→Larger red bodies and higher volume strengthen the signal.
→Stop goes above the high of the engulfing candle.
→Most reliable at resistance or after an extended rally.