What are Bearish Engulfing and Bullish Engulfing Pattern?

Bearish Engulfing Candlestick Pattern

This is a reversal candlestick pattern that has two candlesticks.

1st candle – Small and bullish in nature

2nd candle – Long and bearish in nature

This pattern claims the name “Bearish Engulfing pattern” because the second candle in this pattern covers the first candle completely.

The sellers expect a trend change by psychological and fundamental factors when the pattern forms at the peak of an uptrend.

The sellers initiate pushing the commodity prices down to form a second candle thereby creating selling pressure which indicates a possible trend change.

 Bullish Engulfing candlestick pattern

This is a reversal candlestick pattern that has two candlesticks.

1st candle – Small and bullish in nature

2nd candle – Long and bullish in nature

This pattern claims the name “Bullish Engulfing pattern” because the second candle in this pattern covers the first candle completely.

The buyers expect a trend change in accordance with psychological and fundamental factors when the pattern forms at the peak of an uptrend.

The buyers initiate pushing the commodity prices up to form a second candle thereby creating buying pressure which indicates a possible trend change.

Inference From Bearish Engulfing And Bullish Engulfing Pattern

Both the patterns are used to identify the trends.

The Bearish Engulfing pattern serves us as an entry point.

The Bullish Engulfing pattern serves us as an exit point.

To ensure that our trading strategy is effective, it's always recommended to mix and match the patterns and indicators.