What is Engulfing pattern?
Yutish (engulfing)
In short
A two-candle pattern where the second body fully covers the first. A bullish engulfing suggests buyers have taken control.
Also known as: bullish engulfing, bearish engulfing
An engulfing pattern is a two-candle reversal pattern in which the second candle's body completely covers the first candle's body. It comes in two forms:
- Bullish engulfing — after a decline, a small red candle is followed by a large green candle whose body fully "swallows" the red one.
- Bearish engulfing — after a rally, a small green candle is followed by a large red one.
The logic
In a bullish engulfing, the second day usually opens below the first day's close, so sellers are still pressing. But during the day buyers not only erase the loss, they push price above the previous day's open. That shows the balance of power shifted within a single session.
When it is stronger
- When it forms at a support or resistance level.
- When the second candle's volume is clearly above average.
- When the second body covers not just one but several prior candles.
Limitations
In sideways markets engulfing patterns are common and often meaningless. If the second candle is very large, the stop is far away and the risk/reward can suffer. And if the second body stays inside the first, it is not an engulfing pattern but a harami.
The decline reached a support zone; the engulfing candle came on roughly twice normal volume. Entry just above its high ($98.60) at $98.70; stop just below its low ($95.80) at $95.70; target 2R at $104.70.
Example
Illustrative case (bullish engulfing): a stock falls for several days into support around $40.
- Day 1: opens $42.00, closes $40.50 — a red candle with a $1.50 body.
- Day 2: opens $40.20, closes $42.60 — a green candle with a $2.40 body.
The second body spans $40.20–$42.60 and the first spans $40.50–$42.00, so it is fully covered. Day 2 volume is 1.8 times the 20-day average. If day 2's low is $39.90, a stop usually goes just below it: entry $42.60, stop $39.80 → risk of $2.80 per share.
Mistakes and tips
Compare bodies, not wicks — the classic definition is based on bodies.
Check the trend: a bullish engulfing only makes sense after a decline, a bearish one after a rally.
A big second candle pushes the stop far away — work out the risk/reward ratio before entering.
Frequently asked questions
- Is a bullish engulfing a reliable signal?
- On its own it only shows a probability. It is considered more reliable when it lines up with a level, high volume and the higher-timeframe trend.
- Do the wicks also need to be engulfed?
- Not in the classic definition — only the bodies. Some traders treat engulfed wicks as an extra sign of strength.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
- Reading candlesticksOne candle shows a whole battle in four prices: body, wicks, timeframes, single-candle patterns and their context.Open lesson · 12 min
- Candlestick combinationsEngulfing, harami, stars, soldiers, pin bars and inside bars — with entry, stop and target numbers.Open lesson · 13 min
- Fibonacci: retracements, the golden pocket and targetsPicking the right swing, the 38.2/50/61.8/78.6% levels, the golden pocket, confluence and 1.272/1.618 extensions to plan an entry, stop and target.Open lesson · 12 min
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