Bullish candlestick pattern is a two-candlestick bullish reversal pattern. First there should be a downtrend. Then we should have a red candle followed by a green candle.
The body of the green candle should engulf the body of the first red candle. The idea is in the second candle that constitutes the pattern, the day started below the previous day’s close on a bearish note.
However, as the day progresses, the bulls take-over the charge and eventually succeed to close above previous day’s high.
In such a scenario, if the highest point of these two candlesticks is breached on the upside within next 2-3 candles, the bearish engulfing pattern is said to be confirmed.
A buy trade can be initiated upon confirmation with stop-loss below the low of the two candlestick patterns.
