Bullish Engulfing Candlestick Pattern
A bullish engulfing pattern candlestick pattern is forms when a small red candlestick is followed the next day by a large green candlestick, the body of which completely overlaps or engulfs the body of the previous day’s candlestick.
The Bullish Engulfing pattern is a two-candle reversal pattern.
The bullish engulfing candle appears at the bottom of a downtrend and indicates a surge in buying pressure.
Bullish Engulfing Candlestick Pattern
You can see the Bullish Engulfing Pattern at the bottom of the down trend. This means that now the trend is going to be reversal.
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.
Key Points
- Downtrend
- Bearish Candles
- Gap Down
- Bullish Candles (Close Above Previous Bearish Candles)
- Gap Up
Trade Setup – Bullish Engulfing Pattern
As soon as you see a Bullish Engulfing Pattern. You should be ready to make a position in the market. Either the next candle is open gap up or else you have to wait for the breakout of the bullish candle high.
You should place your stop loss either below the low of the bullish candle or below the low of the bearish candle
Example 1 – Bullish Engulfing Pattern
In these examples, you are well explained about the Bullish Engulfing Pattern.
Example 2 – Bullish Engulfing Pattern
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