A two-candle reversal in which the second body wholly engulfs the first. A single session rewrites yesterday entirely — a decisive vote, one of candlestick analysis's most reliable reversal signals.
The Engulfing Pattern is a two-candle reversal in which the second candle's body completely engulfs the body of the first. The name is literal: yesterday's range is enclosed within today's.
At the bottom of a downtrend it is a Bullish Engulfing (buy reversal); at the top of an uptrend it is a Bearish Engulfing (sell reversal). The visual is striking — one session erases the previous in full — and the psychology is equally direct. Among single- and double-candle signals, the Engulfing is considered among the most trustworthy reversal patterns.
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