Bullish Engulfing Candlestick Pattern

What the Bullish Engulfing pattern means

The second candle opening at or below the prior close and closing above the prior open shows buyers decisively took control and overwhelmed the previous period's sellers. After a downtrend, that shift in control is a strong reversal signal, especially on higher volume.

How the Bullish Engulfing is traded

• →Enter long on a close above the engulfing candle, or on a small pullback into its body.
• →Larger engulfing bodies and higher volume make the signal more reliable.
• →Stop goes below the low of the engulfing candle.
• →It carries more weight at support than in the middle of a range.

Common mistakes

• ✕Chasing the entry far above the engulfing candle and ruining the risk to reward.
• ✕Trading tiny engulfing bodies that barely cover the prior candle.