The Engulfing Bar pattern is named for its characteristic of fully covering the previous candle. While it can engulf multiple previous candles, it must completely cover at least one to qualify as an engulfing bar.
One of the most significant candlestick patterns is the Bearish Engulfing. This pattern consists of two candle bodies: the first is smaller, while the second completely engulfs it. Refer to the illustration below to see how it appears in the market.
Discover Giant Hunter AI
Bearish Engulfing Bar Pattern
Here’s what a bearish engulfing pattern looks like on a chart. This candlestick pattern provides valuable insight into the battle between bulls and bears in the market.
A bearish engulfing bar pattern signals that sellers have taken control of the market. When this pattern appears at the end of an uptrend, it suggests that sellers have overpowered buyers, indicating a potential trend reversal. Check out the example below:
As shown, when this price action pattern appears in an uptrend, it often signals a trend reversal, indicating that buyers are losing control and sellers are pushing the market downward.
However, not every bearish candlestick pattern is a trade signal on its own; additional technical tools are needed to confirm entry points.
We’ll dive deeper into this in the next chapters. For now, open your charts and start identifying any bearish candlestick patterns you come across.
Discover Giant Hunter AI
Bullish Engulfing Bar Pattern
A bullish engulfing bar features two candles: the first has a small body, and the second, larger candle fully engulfs it as shown below.
The bullish engulfing bar pattern indicates a shift in control from sellers to buyers. When it forms during an uptrend, it signals a likely continuation.
However, when it appears at the end of a downtrend, it’s an even stronger reversal signal, suggesting a potential bottoming out. See the example below:
The example above illustrates how a bullish engulfing bar pattern can signal a market reversal. Here, the smaller candle, representing selling pressure, is fully engulfed by the larger candle, symbolizing buying strength. The color of the candles isn’t crucial; what matters is that the first candle is completely covered by the second.
This setup alone isn’t enough for trading decisions; additional factors are needed, which we’ll cover soon. For now, practice spotting both bearish and bullish engulfing bars on your charts—it’s an essential skill.
