Bullish Engulfing Candlestick
The Bullish Engulfing Candlestick is a powerful bullish candlestick reversal pattern.
It occurs in a downtrend signifying that the end of the downtrend is near and the beginning of an uptrend is in progress.
It is so named as it engulfs the previous bearish candle.
Bullish Engulfing Candlestick Pattern
For the candlestick chart pattern to be confirmed as the Bullish Engulfing Candlestick following criteria must be fulfilled:
- This reversal pattern must occur in a downtrend.
- This reversal pattern must consists of two candles.
- The first day candle must be a full black (bearish) bodied candle. It must close lower than the previous low confirming an existing downtrend.
- The second day candle must be a full white (bullish) bodied candle, i.e. the close price must be higher than the open price.
- The opening price of the bullish engulfing candle may be lower than the close of the previous bearish candle but the closing
price of the bullish engulfing candle must be higher than the opening of the previous bearish candle.
The opposite is true for the case of the Bearish Engulfing Candlestick.