Engulfing Pattern Pattern
A two-candle reversal pattern where the second candle completely engulfs the body of the first, signaling potential reversal.
Quick Answer
A two-candle reversal pattern where the second candle completely engulfs the body of the first, signaling potential reversal.
What Is the Engulfing Pattern Pattern?
The Engulfing Pattern is a powerful two-candlestick reversal pattern. A Bullish Engulfing occurs at the bottom of a downtrend when a green candle completely engulfs the previous red candle. A Bearish Engulfing occurs at the top of an uptrend when a red candle engulfs the previous green candle. The larger the engulfing candle, the stronger the signal.
How the Engulfing Pattern Forms
- 1First candle is relatively small
- 2Second candle opens beyond first candle's close
- 3Second candle closes beyond first candle's open
- 4Second candle body completely covers first
How to Confirm the Pattern
Best Timeframes for Engulfing Pattern
How to Trade the Engulfing Pattern
- →Identify potential reversals at key levels
- →Time entries for reversal trades
- →Set stops beyond the engulfing candle
- →Combine with support/resistance analysis
Common Mistakes to Avoid
Detect Engulfing Pattern Automatically
VaultCharts automatically detects Engulfing Pattern patterns on your charts. No manual analysis needed - the pattern is highlighted with entry zones and targets.