Bearish Engulfing Candlestick Pattern

The Bearish Engulfing Candlestick Pattern is considered to be a bearish reversal pattern, usually occurring at the top of an uptrend.

Bearish Engulfing Candlestick Pattern

You will see this pattern forming above the top of the uptrend. This means that from here you can see the trend reversal.

From here you should understand one more thing that if you have created a buying position in the market then it is time to book your profit.

Simultaneously, the time has come to take a new position in the market.

Let us understand this pattern in detail. Before this pattern you will see an uptrend. After this a bullish candle will appear.

The next Bearish candle will be open gap up. The bearish candle will cover the bullish candle nicely. After this the next candle gap down will be seen.

If a flat opening is seen then you should wait for the breakdown of the bearish candle’s low.

Key Points

Uptrend
Bullish Candle
Gap Up
Bearish Candle (Close Below Previous Bullish Candle)
Gap Down

Trade Setup – Bearish Engulfing Candlestick Pattern

Once you get the breakdown of the low of the Bearish candle, you can make your position in the market. Also you can place your stop loss above the high of the bearish candle.

You have to wait for the breakdown of the bearish candle low before making your position in the market. You can get this breakdown in two ways.

First you get to see the gap down opening.

Second you get the breakdown of bearish candle’s low after giving flat opening or gap up opening.

Bullish Engulfing vs Bearish Engulfing

Bullish Engulfing

The first candle in this will be a Bearish candle. The next candle will be a bullish candle. Which will open the gap down.

The Bearish candle should be inside the body of the Bullish candle, from here you get to know two things.

First – If you have created any selling position in the market then you should book your profit as soon as you see the Bullish Engulfing Pattern.

Second – If you have seen this pattern then it will mean trend reversal from here and you will get an opportunity to create new positions in the market.