Engulfing Patterns
Lesson 2 of 108 min6 exercises
Learn · 1/4
When One Candle Swallows Another
Engulfing patterns are powerful two-candle reversal patterns. The second candle completely "engulfs" the body of the first, showing a dramatic shift in momentum.
BULLISH ENGULFING
Requirements:
1. First candle is bearish (red)
2. Second candle is bullish (green)
3. Second body COMPLETELY covers first body
What it means: Sellers had control, then buyers overwhelmed them completely.
Signal: Strong bullish reversal.
Nickname: "The Swallow" or "Bull Trap Escape"
1. First candle is bearish (red)
2. Second candle is bullish (green)
3. Second body COMPLETELY covers first body
What it means: Sellers had control, then buyers overwhelmed them completely.
Signal: Strong bullish reversal.
Nickname: "The Swallow" or "Bull Trap Escape"
Learn · 2/4
BEARISH ENGULFING
Requirements:
1. First candle is bullish (green)
2. Second candle is bearish (red)
3. Second body COMPLETELY covers first body
What it means: Buyers were in control, sellers took over violently.
Signal: Strong bearish reversal.
Nickname: "The Devour" or "Bear Trap Escape"
1. First candle is bullish (green)
2. Second candle is bearish (red)
3. Second body COMPLETELY covers first body
What it means: Buyers were in control, sellers took over violently.
Signal: Strong bearish reversal.
Nickname: "The Devour" or "Bear Trap Escape"
Learn · 3/4
LAST ENGULFING PATTERN
A rare variation where a candle engulfs the PREVIOUS engulfing pattern:
Candle 1 → Candle 2 (engulfs 1) → Candle 3 (engulfs 2)
Signal: Continuation of the direction of candle 3. Very powerful.
Candle 1 → Candle 2 (engulfs 1) → Candle 3 (engulfs 2)
Signal: Continuation of the direction of candle 3. Very powerful.
Size Matters
The larger the engulfing candle compared to the first:
- Just covers: Moderate signal
- 2x size: Strong signal
- 3x+ size: Very strong signal
Also watch volume - engulfing patterns on high volume are more reliable.
- Just covers: Moderate signal
- 2x size: Strong signal
- 3x+ size: Very strong signal
Also watch volume - engulfing patterns on high volume are more reliable.
Watch out
An engulfing pattern that only covers the body (not wicks) is still valid. Wicks are bonus confirmation but not required.
Learn · 4/4
Key takeaways
- Engulfing = second candle body completely covers first candle body
- Bullish engulfing: red then bigger green = buy signal
- Bearish engulfing: green then bigger red = sell signal
- Bigger size difference = stronger signal
Next: 6 quick exercises. Miss one and it comes back at the end.