A two-bar pattern that marks a shift in momentum.
Bullish engulfing
- Candle 1 is a small bearish candle; Candle 2 is a bullish candle whose body "swallows" the body of candle 1.
- Appears after a decline → buyers take over.
Bearish engulfing
- Candle 1 is a small bullish candle; Candle 2 is a bearish candle that swallows the body of candle 1.
- Appears after a rise → sellers take over.
Pattern quality
Stronger when: the engulfing candle has a large body with short wicks, volume/momentum increases, and it is located at an important level in the direction of the bigger trend.
Key points
- Engulfing = a transfer of control within two periods.
- Size and location determine its weight.
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