Bullish Engulfing: recognizing buyers taking over at a downtrend's base
The bullish Engulfing is a two-candle reversal pattern that appears after a downtrend. A small bearish candle is followed by a larger bullish candle whose body completely covers, or "engulfs," the body of the first. The pattern shows that buyers have overpowered sellers within a single session.
What does a bullish Engulfing look like?
The pattern forms over two consecutive candles:
- First candle: A small bearish (black or red) candle that continues the existing downtrend.
- Second candle: A long bullish (white or green) candle that opens at or below the close of the first candle and closes at or above its open.
Only the bodies need to be engulfed. The shadows of the first candle can extend beyond the body of the second. The bigger the second body is compared with the first, the clearer the pattern.
What does the pattern tell you?
The first candle shows that sellers are still pushing prices down, but with less force than before, as its small body suggests. The second candle opens at the same level or lower, so the session starts in the sellers' favor. Buyers then take control and push the price above the first candle's open, wiping out the previous session's entire loss.
A complete reversal of the prior session's move in a single candle is what many traders watch for. It shows that demand now exceeds supply, which may signal that the downtrend is ending.
How reliable is the bullish Engulfing?
The bullish Engulfing is one of the most widely followed candlestick patterns. It forms often, which also means many occurrences have no follow-through. Traders usually look for extra evidence before acting on it:
- Prior trend: The pattern only has meaning after a clear downtrend.
- Size of the second candle: A bullish body that covers several previous candles, not only the last one, shows stronger buying.
- Volume: Higher volume on the second candle suggests more buyers took part.
- Confirmation: A higher close on the next candle adds weight to the reversal.
- Context: A pattern that forms near a support level or in oversold conditions, for example on the RSI, carries more weight.
How does the bullish Engulfing differ from a bullish Harami?
The two patterns use the same pair of candle colors in reverse proportions. In a bullish Engulfing, the second candle's body is larger and covers the first. In a bullish Harami, a long bearish candle is followed by a small bullish candle whose body fits inside the first. The Engulfing shows buyers taking control, while the Harami shows selling momentum fading. The Piercing pattern is a related pattern in which the bullish candle closes only above the midpoint of the first body instead of covering all of it.
What are the limitations of the pattern?
Like any candlestick pattern, the bullish Engulfing describes what has happened, not what will happen. In a strong downtrend, the price often falls again after one strong session. Because the pattern is common, it can appear many times on lower timeframes without a lasting reversal. The large second candle can also put a natural stop-loss, below its low, far from the entry, which affects the risk of a trade. Traders often combine the pattern with other analysis to filter out weaker signals.
How to find the bullish Engulfing on TradingView
TradingView can detect this pattern for you on any chart:
- Built-in indicator: Open Indicators and search for Engulfing (bullish). The indicator marks each occurrence on the chart.
- All candlestick patterns at once: Add the All candlestick patterns indicator to see every supported pattern on one chart and choose which ones to display in its settings.
- Trend filter: In the indicator settings, choose how the prior trend is detected (based on SMA 50, or SMA 50 and SMA 200), or turn trend detection off.
- Alerts: Create an alert on the indicator to get notified when a new pattern forms.
Understanding the bullish Engulfing
The bullish Engulfing is a two-candle pattern made up of a small bearish candle and a larger bullish candle whose body covers the first body. It signals a possible reversal from a downtrend to an uptrend. The pattern is common and widely watched, so traders usually confirm it with volume, the next candle, and other indicators before acting on it.