Finance World

Date: 30- Oct-26

Bullish Engulfing Candlestick Pattern

Bullish Engulfing is a two-candlestick reversal pattern used in technical analysis to identify a potential reversal from downtrend to uptrend in market direction.

Formation:

• First candle: Bearish (red) candle.
• Second candle: Bullish (green) candle.
• The second candle’s real body completely covers the first candle’s real body.
• We would not consider wicks from both the candle in the ingulfing formation

Criteria to find right Bullish Engulfing: This pattern can be formed anyplace in the candlestick chart. But we need to focus only on those Bullish Engulfing which are following following criteria:

1. Bullish Engulfing should be formed after 5- or more downtrend candles or at least 15% down
2. First candle would always red
3. In first candle we can consider Doji candle also
4. Second Candle would always green
5. Ignore wicks in pattern formation
6. Buy should be opening price of next candle, or little low based on risk management
7. We may still buy if next candle open with gap-up, but that would be under risk management
8. Stop loss would be apply below the wick of Bullish Engulfing candles. it can be any of these two candles which wick would lower

Bearish Engulfing Candlestick Pattern:

Bearish Engulfing is a two-candlestick reversal pattern used in technical analysis to identify a potential reversal from uptrend to downtrend in market direction.

Formation:

• First candle: Bullish(green) candle.
• Second candle: Bearish (red) candle.
• The second candle’s real body completely covers the first candle’s real body.
• We would not consider wicks from both the candle in the ingulfing formation

Criteria to find right Bearish Engulfing: This pattern can be formed anyplace in the candlestick chart. But we need to focus only on those Bearish Engulfing which are following following criteria:

1. Bearish Engulfing should be formed after 5- or more uptrend candles or at least 15% up
2. First candle would always green
3. In first candle we can consider Doji candle also
4. Second Candle would always red
5. Ignore wicks in pattern formation
6. Sell should be opening price of next candle, or little above based on risk management
7. We may still sell if next candle open with gap-down, but that would be under risk management
8. Stop loss would be apply above the wick of Bearish Engulfing candles. it can be any of these two candles which wick would higher

Disclaimer: The information provided here is for educational and informational purposes only and should not be construed as financial, investment, or legal advice. Always do your own research and consult with a SEBI-registered financial advisor before making any investment decisions. Investments in the financial markets are subject to risks, including the risk of loss of principal.