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What is a Bullish
Engulfing Pattern?
The bullish engulfing pattern is made of two candlesticks, a black first and then a white. The black candlestick should not be so small that it would be too easy to engulf. The second should be a long white candlestick – the bigger it is, the more bullish. The white body must engulf the entire body of the first black candlestick. The significance of the engulfing candle is increased by two factors: the size of the candle and the volume on the day it appears. The bigger the engulfing candle, the more significant. A large bullish engulfing candle shows the bulls have taken control of the market after a downtrend. If volume is above normal when the signal is given, the signal is more powerful.
This pattern should occur during a downtrend. Ideally it should appear after three or more black candles. When this engulfing pattern appears in an uptrend or when their is no clear direction, it has no real significance.
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