Bullish Engulfing
📈 Bullish Engulfing Candlestick Pattern – The Signal of Strong Reversal
The Bullish Engulfing candlestick is one of the most powerful reversal patterns in technical analysis. It represents a moment when buyers completely overtake sellers, indicating a potential upward price move.
Illustration: The green candle completely engulfs the red one — classic Bullish Engulfing pattern
📘 What Is a Bullish Engulfing Candlestick?
A Bullish Engulfing pattern occurs when a small red (bearish) candle is followed by a larger green (bullish) candle that completely covers or “engulfs” the previous candle’s body. This shows that the market sentiment has shifted from selling to strong buying pressure.
🧭 Key Characteristics
- Appears after a downtrend or a period of weakness.
- The green candle’s body completely engulfs the previous red candle’s body.
- Indicates a potential reversal from bearish to bullish sentiment.
- Stronger signal when confirmed by high trading volume.
Chart Example: Bullish Engulfing forming after a downtrend — confirmation of reversal
💡 Psychology Behind the Pattern
The first red candle represents sellers in control. But on the next session, buyers step in aggressively — pushing prices higher and fully overtaking the prior candle. This shift in control shows that momentum is turning toward the upside, attracting more bulls into the market.
🟢 Pro Insight: A Bullish Engulfing candle is more reliable when it appears near a key support level or after a prolonged downtrend.
⚙️ How to Trade the Bullish Engulfing Pattern
- Identify a clear downtrend or support area.
- Spot the Bullish Engulfing formation.
- Wait for the next candle to close above the engulfing candle’s high for confirmation.
- Enter a long position with a stop-loss below the engulfing candle’s low.
- Target resistance zones or use risk/reward ratios (1:2 or 1:3).
📊 Example Trade Setup
Suppose a stock has been falling for days, and you spot a Bullish Engulfing near the 200-day moving average. You wait for the next candle to confirm the reversal. Once it closes above the engulfing high, you enter a buy trade with a stop below the low. Within a few sessions, prices rally upward — confirming the reversal.
🏁 Conclusion
The Bullish Engulfing candlestick pattern is a powerful indicator that signals the transition from bearish to bullish market momentum. When combined with trend analysis, support levels, and confirmation signals, it becomes a highly reliable entry setup for traders.
“When the green candle swallows the red — the bulls take charge of the battlefield.”