Key Takeaways
Bullish Engulfing
A two-candle reversal pattern where a large bullish candle completely engulfs the previous bearish candle. One of the most reliable reversal patterns.
Market Psychology
The bulls have overwhelmed the bears, completely reversing the previous session decline and establishing control.
Candle Structure
Trading Setup Example
Entry, stop loss, and take profit levels.
Always wait for pattern confirmation before entering a trade.
Where This Pattern Appears
Trend context and market position.
Appears at the bottom of a downtrend, signals bullish reversal.
How to Identify
First candle is bearish (red/black)
Second candle is bullish (green/white) and completely engulfs the first
Second candle body opens below and closes above first candle body
Appears at the bottom of a downtrend
Confirmation Signals
Trading Strategy
š„ Entry
Enter long at the close of the engulfing candle or on next candle open
š Stop Loss
Place stop loss below the engulfing pattern low
šÆ Take Profit
Target previous swing highs or use Fibonacci extensions
āļø Risk/Reward
1:2.5
Common Mistakes to Avoid
Pro Tips
Best Timeframes
Pattern Variations
Educational Disclaimer
This content is for educational purposes only and does not constitute financial or investment advice. Trading involves significant risk and you may lose your capital. Always consult a licensed financial advisor before making investment decisions.
Frequently Asked Questions
Related Learning Resources
Related Patterns
Hammer
A single candlestick pattern with a small body at the top and a long lower shadow (at least 2x the body). Appears at the bottom of a downtrend.
Inverted Hammer
A single candlestick with a small body at the bottom and a long upper shadow. Appears at the bottom of a downtrend, signaling potential reversal.
Piercing Line
A two-candle bullish reversal pattern where the second candle opens below the first candle low but closes above the midpoint of the first candle.