The Bullish Engulfing Candlestick is a powerful bullish candlestick reversal pattern.
The power of the Bullish Engulfing Pattern comes from the incredible change of sentiment from a bearish gap down in the morning, to a large bullish real body candle that closes at the highs of the day. Bears have overstayed their welcome and bulls have taken control of the market.
For the candlestick chart pattern to be confirmed as the Bullish Engulfing Candlestick following criteria must be fulfilled:
- This reversal pattern must occur in a downtrend
- This reversal pattern must consists of two candles.
- The first day candle must be a full black (bearish) bodied candle. It must close lower than the previous low confirming an existing downtrend.
- The second day candle must be a full white (bullish) bodied candle, i.e. the close price must be higher than the open price.
- The opening price of the bullish engulfing candle may be lower than the close of the previous bearish candle but the closing price of the bullish engulfing candle must be higher than the opening of the previous bearish candle.
