The Ultimate Guide to Bullish Engulfing Candlestick Patterns

Last updated: January 4, 2024

Bullish Engulfing Pattern

Engulfing patterns are made up of multiple candles, and are aptly named as one candle "engulfs" the previous candles. There are bullish and bearish equivalents to this pattern. A bullish candle "engulfs" the body of the previous bearish candle:

The bodies of the engulfing candles completely overlap the bodies of the prior candles, showing that the opposing party (bears vs bulls) has regained market dominance for the time being.

Chart

General Identification & Interpretation

Steve Nison is credited with bringing Japanese candlestick charting to the West. In his book "Japanese Candlestick Charting Techniques" he describes bullish engulfing patterns with the following characteristics:

Typical characteristics

• The body of the second candle must engulf the body of the first candle
• The candles must be opposite colors (except if the first candle is a doji)
• For the engulfing pattern to indicate a reversal, the pattern must occur after a clear downtrend (for the bullish engulfing pattern to signal a potential bullish reversal)

Examples of use as a trading indicator

• Potential reversal signal after significant market movements
• Support or resistance levels (support at the low end of the bullish engulfing patterns, resistance at the high end of the bearish engulfing patterns)

Other interpretations

• The engulfing candlestick pattern can also "engulf" more than one candle.

More for beginners

Check out our quick start guide to candlestick charting for more information if you are new to candlestick charting!