Candlestick Pattern Encyclopedia
Engulfing Patterns
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
Bullish Engulfing - Green candle swallows red
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"
BEARISH ENGULFING
Bearish Engulfing - Red candle swallows green
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"
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.
An engulfing pattern that only covers the body (not wicks) is still valid. Wicks are bonus confirmation but not required.
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