subject: Bullish and Bearish Engulfing Candlestick Patterns [print this page] Bullish and Bearish Engulfing Candlestick Patterns
Many traders make a good living catching changes in the trend. Catching a trend change means trying to pick the top or bottom of a trending move. It is not easy. But it can be highly rewarding if done correctly. Bullish and bearish Engulfing Candlestick Pattern is one of the most popular patterns used by traders to anticipate a trend reversal.This is a two stick pattern and it takes two days for the pattern to develop. The pattern's name comes from the fact that the signal day completely engulfs the setup day. So the candle body and the wick on the signal day engulfs the candle body and wick on the setup day.In case of the bullish engulfing pattern, the first day is down. But on the second day, heavy buying starts in the market. So much buying in the market takes place that it completely surpasses both the open and the high. On the other hand, in case of the bearish engulfing pattern, the setup day candle is bullish. On the signal day, heavy selling starts in the market forming a bearish candle that completely engulfs the first day candle.The bigger the second day candle, the more powerful the trend reversal signal. If it is a very big bullish candle, it means bulls are in total control and if it is a big bearish candle, it means the bears are now in full control.When you combine the engulfing candlestick pattern with a indicator like the CCI, you can get very quick and powerful trend reversal warning.Bulls and bears constantly battle for the control of the market. When a bullish engulfing pattern is formed, it means bulls are in total control of the market. Similarly when a bearish engulfing pattern is formed, it means bears are now controlling the market.When it is a bullish engulfing pattern, it means the bulls are going to control the market for the coming days. Similarly when it is a bearish engulfing pattern, it means the bears will control the market for the days to come.
