Engulfing
NeutralReliability: MediumAlso called · bullish engulfing, engulfing candle, bearish engulfing, engulfing pattern
A candle in the opposite direction that completely covers the previous body.
How to spot it
- The second candle's body fully wraps the first
- Rising volume raises reliability
Why this shape forms
Covering the prior body outright means control changed hands in one session. The wider the cover, the sharper the handover.
Where it actually means something
It has to come at the end of a trend. Inside a range, candles engulf each other constantly and none of it is a signal.
What else to check
Check that the engulfing candle traded more volume than the one it covered. Covering on no volume is just noise.
This means you're wrong
Void if price retraces the far end of the engulfing candle.
The mistake beginners make
Including the wicks in the judgement. The body is the measure.
Easy to confuse with
Unlike a hammer, you have to read two candles together. If the first candle is tiny it is easy to engulf, and the meaning thins out.
Real examples from the community
Patterns are probabilistic tendencies, not guarantees. This is not investment advice.