Engulfing Pattern

Formed when one candle wraps over the previous one completely, engulfs the previous candle.

Shows that either the bulls or bears have gained control of the market

Engulfing patterns are more powerful than the piercing and the dark cloud cover

If it engulfs more than one previous candle, it is considered more powerful.

Consider the following factors when observing the engulfing pattern

·         Relative size of the candle body

·         Comparison between the winks with one another

    Bear Engulfing Pattern 

See price drops after the formation of the pattern 

This pattern tells us that the bulls are no longer in control of the market. You should think of selling

First variation is you could have the winks completely engulfing the previous candle the other variation is the body and the winks engulfing the previous bullish candle. 

If it occurs at a resistance zone it is more likely that price will drop, here are other areas that can act as resistance

·         Moving averages

·         Fibonacci zones 

    Bullish Engulfing Pattern 

bulls come in after the formation of the pattern 

Simply tell us that bears are no longer in control of the market especially if it is at a support, the moving averages give us a direction bias

Formation of a bullish engulfing at the upward aligning moving averages tell us that the trend will continue higher

How to trade the Pattern

Always make sure you have other factors in your favor before using this pattern, find a support/ resistance zone, moving averages etc.

Make sure you get a risk to reward of 1:2