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Engulfing pattern is nothing but a reversal pattern,maybe bullish or bearish.. If the today’s open is bellow than the previous close and today’s close must be higher than the previous close.volume is not important.
Engulfing pattern is trend reversal pattern. two types of engulfing
Bearish engulfing
Bullish Engulfing
Engulfing pattern is trend identifier bullish or bearish .
Bullish engulfing is formed during the downward cycle when price is falling down. The bull candle should completely cover the bear candle with volume .
we can buy stocks when the price goes above the previous day high .Sell when price falls below the tail of the green body .Risk factor is previous day high and low .
Bearish engulfing is opposite of above with sellers being aggresive .
Engulfing pattern is a trend reversal pattern.
Bullish Engulfing : The latest bullish candlestick should cover the previous bearish candle stick. Volume might be slightly high. Buy after the price crosses the highest of the bullish candlestick.
Bearish Engulfing : The latest bearish candlestick should cover the previous bullish candlestick. Volume might be slightly high. Sell after the price crosses below the lowest of the bearish candlestick.
Engulfing is a reversal pattern in Candlestick analysis which can be bearish or bullish.If it is formed at the end of uptrend it Bearish and Bullish if it is formed at bottom of uptrend.
conditions for Bearish Engulfing Eg:
#)uptrend in the stock previous days
#)Bullish candle formed at top and followed by bearish candle in day which covered the entire bullish candle.Also powered with good volume
#)Short at price below the close price of bearish candle.
#Stop loss price above open price of bearish candle
#)Target difference between the short price and Stop loss
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