Last Updated on 2023-12-13 by Admin
Indication
Bearish reversal
Reliability
Medium
Description
Occurring during an uptrend, this pattern characterized by a large black real body, which engulfs a white real body (it doesn’t need to engulf the shadows). This signifies that the uptrend has been hurt and the bears may be gaining strength. The Engulfing indicator is also the first two candles of the Three Outside patterns.
It is a major reversal signal.
Factors that are increasing this signal’s reliability:
- The first candlestick has a very small real body and the second candlestick a very large real body.
- The pattern appears after a protracted or very fast move.
- Heavy volume on the second black candlestick.
- The second candlestick engulfs more than one real body.
Notes
- Two candle Bearish pattern
- Reverse of a bullish engulfing pattern
- Must come after and uptrend
- High of the pattern becomes resistance
- First candle is white real body
- Second candle is a black body that completely engulfs the first candle
- The first candle real body must be as small as possible
- Shadows are not a concern
