Bullish engulfing candlestick Pattern

What is Bullish engulfing candlestick Pattern?

At the bottom of a downtrend, a bullish engulfing candle forms, signalling a surge in purchasing pressure. In most cases, the bullish engulfing pattern heralds a trend reversal as more buyers flood the market, driving prices up. Two candlesticks are part of the design, and in both of them, the second candle entirely engulfs the body of the first red candle.

The bullish engulfing pattern is described in different ways by stock market traders. While some traders assume that the tails of candlesticks must be included in the analysis of stock decisions, whereas others think that a bullish engulfing pattern is valid even when the tails are not engulfed.

Another important aspect you may find useful while interpreting bullish engulfing patterns is that it is possible for more than a single candle to engulf the preceding red candle in this arrangement.

This means that a single red candle may be followed by two, three, or even four green candlesticks of varying length, all forming a part of the bullish candlestick pattern. This combination of candlesticks is still considered to engulf the single preceding red candlestick as long as the body (and tails) is fully covered by its green counterparts.

Characteristics of a bullish engulfing pattern

• A strong green candle that ‘engulfs’ the previous red candle body.

• Happens at the bottom of a downward trend.

• Stronger signals are given when the red candle is a Doji, or when subsequent candles close above the high of the bullish candle.

Advantages of using Bullish Engulfing Candlestick

• The bullish engulfing pattern is an essential indicator of the reversal of the stock market.

• It provides you with a viable indication for your stock trading decisions irrespective of your stock trading style.

• Can combine bullish patterns with statistical analysis to accurately make a judgment of complete reversal in investor sentiments.

• Witnessing specific signs with respect to trends increases the significance of the bullish engulfing trading pattern.