Lesson 1: How to Read Engulfing Pattern

Let's see the Engulfing pattern and understand how to read

Engulfing candles are one of the most popular candlestick patterns, used to determine whether the market is experiencing upward or downward pressure.

There are two types of Pattern are as follows:

1. Bullish Engulfing Pattern :

The market must be in a clearly definable downtrend, not in sideways consolidation.  The first candle is the colour of the short term trend (down) or a doji. The second candle is the colour of the reversal (up). The second candle body engulfs the previous body. Ignore the wicks (shadows).

An even stronger signal occurs when a candle body engulfs the bodies of 2 or 3 previous candles.

2. Bearish Engulfing Pattern :

The market must be in a clearly definable trend. The first candle is the colour of the short term trend (up) or a doji. The second candle is the colour of the reversal (down). The second candle body engulfs the previous candle body. Ignore the wicks (shadows).The size of the candle body being engulfed does not matter.

A stronger signal occurs when 2 or more candle bodies are engulfed by one candle body.