Bearish Engulfing in Candlestick Reversal Pattern

  • Bearish Engulfing pattern is just mirror image of bullish engulfing pattern with bearish implication.
  • First, we should be having an up-trend. Then we should have a green candle as continuation.
  • The next day should see a gap up above the close of previous day. The 2nd day candle should eventually close red with its body totally engulfing the body of the first candle.
  • The confirmation comes when within next 2-3 candles the price moves below the low of the two candles forming the Bearish Engulfing pattern.
  • On confirmation a trader may take a short trade with stop loss above the top of the two candlestick patterns. Larger the 2nd candle, more bearish is the pattern.

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