BEARISH ENGULFING PATTERN
Back to GlossaryDefinition
A bearish reversal candlestick where a large down candle engulfs the prior up candle.
Summary
A Bearish Engulfing Pattern is a two-candle reversal pattern in technical analysis that signals a potential shift from upward to downward price movement. It occurs when a small bullish (green/white) candle is completely 'engulfed' or covered by a larger bearish (red/black) candle that follows it. The bearish candle's body must completely contain the previous bullish candle's body, indicating strong selling pressure has overtaken buying pressure. This pattern is most reliable when it appears after an uptrend and at significant resistance levels.
Usage Context
Understanding this term is crucial when studying technical analysis, candlestick pattern recognition, and developing trading strategies. It's particularly important for identifying potential trend reversals and making informed entry/exit decisions in trading scenarios.
Common Confusions
- Thinking any red candle after a green candle is a bearish engulfing pattern
- Confusing it with a bearish harami where the second candle is smaller, not larger
- Believing the pattern is always 100% accurate without considering volume and context
- Not waiting for confirmation and acting immediately on the pattern
- Mixing up which candle needs to engulf which (the bearish candle must engulf the bullish one)
