Company : Aurobindo Pharma Limited, a Pharma company
Chart type : Candlestick pattern
Engulfing Pattern is one of the powerful pattern and can be easily identifiable and occurs frequently. It also occurs over two trading session. It is one the trend reversal pattern. Engulfing happens over successive Bullish or Bearish trend.
Enclosed is the Bearish Engulfing chart. Engulfing location is highlighted in Rectangular shade colour. This pattern behaviour is in compliance to:
(a) The trend prior to engulfing is upward and Bullish. i.e., GREEN Candle. Successive trade session shows that Bulls are having strong Control with heavy & successive Buying.
(b) After successive Bullish trades, on a new trade session, price opens at a new high and moves downward and closes at lower level than the previous Green candle forming a bigger RED Candle. The Red Candle size is so large that it appears as if it engulfs previous Green Candle. This indicates Bulls lost their control and Bears has taken control.
(c) Since Bearish has taken over control, it is expected the price will move downward due to heavy selling pressure resulting trend reversal.
The effect of engulfing may be seen that next successive trades are Bearish. This reversal causing Bearish trend is known as Bearish Engulfing.
