What Is a Bullish Engulfing Pattern, and What Does It Mean?

A bullish engulfing pattern is characterized by a white candlestick that ends higher than the previous day’s opening after beginning lower. When a tiny black candlestick indicating a bearish trend is followed the next day by a huge white candlestick indicating a bullish trend, the body of which totally covers or engulfs the body of the previous day’s candlestick, it can be distinguished. When four or more black candlesticks precede a bullish engulfing pattern, it is more likely to suggest a reversal. A two-candle reversal pattern, the bullish engulfing pattern is a two-candle reversal pattern. Regardless of the length of the tail shadows, the second candle totally ‘engulfs’ the true body of the first. In a downtrend, this pattern consists of a single dark candle followed by a bigger hollow candle. The price begins lower than the previous low on the second day of the pattern, but buying pressure propels it up to a greater level than the previous high, resulting in an evident victory for the purchasers.

Bullish engulfing and Bearish engulfing are candlestick patterns, and “candlesticks” are a way of graphically representing stock (or other financial instrument) prices. If you look into candlesticks, you’ll find they are perhaps the most useful graphical representation you can use on price charts, as they allow you to show four different prices for each day in an easy to understand form.

The bullish engulfing pattern suggests that a stock price which has been in a downtrend may turn upward, or bullish; the bearish engulfing shows the opposite.”Engulfing” means that in this pattern one of the candles is much larger than or “engulfs” the other one.