A reversal pattern of two candle sticks that forms when a small black candlestick is followed the next day by a large white candlestick, the body of which completely overlaps or engulfs the body of the previous day’s candlestick is known as Bullish Engulfing Pattern.
The meaning of engulf to surround or cover something completely.
In the Bullish Engulfing pattern one candlestick covers (or engulf) another.
When a downtrend and occurs by one bearish candlestick (which is covered) and one bullish candlestick (which does the covering), then this two candlestick pattern occurs after.
The Bullish Engulfing Pattern can be identified by the following crucial criteria:
An obvious downtrend must be in progress.
There should be a small black candle at the bottom of the downtrend.
A white candle must follow the black candle and its body must completely cover the black candle (engulf it).
The white candle’s top must be above the black candle’s top, and its bottom must be below the black candle’s bottom.
Meaning
The bears were controlled as a Bullish Engulfing pattern appears in a downtrend
The bears cannot increase the price fast before the bulls take control because there is a gap down.
The candle comes to close and cause a price hike as compared to open price of the previous candle.
When a gap downs in the morning to a strong upward hike which causes a large bullish candle and shift in sentiment occurs.
There is a possibility of reversal as bulls are in control but the confirmation is required yet.
A better specific Bullish Engulfing pattern can be analyzed by observing these two points:
The reversal pattern is expected to be effective if the preceding downtrend is long and significant.
The candlestick pattern will be stronger when the body of white candle will be taller.
A
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B
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C
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