Bullish Engulfing Pattern

DEFINITION of 'Bullish Engulfing Pattern'

A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses or "engulfs" the previous day's candlestick. The shadows or tails of the small candlestick are short, which enables the body of the large candlestick to cover the entire candlestick from the previous day.

Bullish Engulfing Pattern

BREAKING DOWN 'Bullish Engulfing Pattern'

As implied in its name, this trend suggests that the bulls have taken control of a security's price movement from the bears. This type of pattern usually accompanies a declining trend in a security, suggesting that a low or end to a security's decline has occurred. However, as usual in candlestick analysis, the trader must take the preceding and following days' prices into account before making any decisions regarding the security.

RELATED TERMS
  1. Outside Reversal

    A price chart pattern in which a security's high and low prices ...
  2. Bearish Engulfing Pattern

    A chart pattern that consists of a small white candlestick with ...
  3. Bearish Harami

    A trend indicated by a large candlestick followed by a much smaller ...
  4. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  5. Dark Cloud Cover

    In candlestick charting, a pattern where a black candlestick ...
  6. Bullish Harami

    A candlestick chart pattern in which a large candlestick is followed ...
Related Articles
  1. Active Trading

    Tales From The Trenches: Location Is Everything

    When a candle pattern re-occurs near a moving average, it may indicate future support or resistance.
  2. Charts & Patterns

    The Basic Language Of Candlestick Charting

    If you want to use candlestick charting to get a sense of where a stock is headed, you need to learn how to read this unique charting language.
  3. Charts & Patterns

    Candlestick Charting: What Is It?

    Discover the components and basic patterns of this ancient technical analysis technique.
  4. Forex Education

    Candlestick Charting: Perfecting The Art

    Take a look at continuation patterns and how they can confirm or deny trends.
  5. Charts & Patterns

    Candlesticks Light The Way To Logical Trading

    Crowd psychology is the reason this technique works. Find out how to make it work for you.
  6. Active Trading

    Candlesticks And Oscillators For Successful Swing Trades

    Take advantage of short-term price moves by pinpointing reversals.
  7. Active Trading Fundamentals

    4 Stocks With Bullish Head and Shoulders Patterns for 2016 (PG, ETR)

    Discover analyses of the top four stocks with bullish head and shoulders patterns forming in 2016, and learn the prices at which they should be considered.
  8. Chart Advisor

    Uptrending Stocks Dwindle, a Few Remain (EW, WEC, WR)

    The number of uptrending stocks is shrinking, but here a few that remain in uptrends.
  9. Chart Advisor

    Trade Setups Based on Descending Trend Channels (LBTYK, RRC)

    These descending trend channels have provided reliable sell signals in the past, and are giving the signal again.
  10. Investing News

    Is It Time To Sell Technology Stocks? (LNKD, AAPL)

    Technology stocks have taken a drubbing in recent days. Is it time to sell them?
RELATED FAQS
  1. How effective is creating trade entries after spotting a Piercing pattern?

    The piercing pattern candlestick formation is considered by traders and analysts to be a very reliable bullish market reversal ... Read Full Answer >>
  2. How are Piercing patterns interpreted by analysts and traders?

    The piercing pattern, also known as the “piercing line” pattern, is a two-candle formation commonly interpreted by traders ... Read Full Answer >>
  3. How are Sushi Roll patterns interpreted by analysts and traders?

    The sushi roll candlestick pattern is commonly interpreted by traders and market analysts as an indication of possible trend ... Read Full Answer >>
  4. What are the most common Bullish patterns used by traders?

    There are several key bullish candlestick patterns that traders commonly use as signals to either enter buy trades or close ... Read Full Answer >>
  5. How are Outside Days interpreted by analysts and traders?

    Outside days are commonly interpreted by traders and market analysts as strong trend signals, especially when they occur ... Read Full Answer >>
  6. What are common strategies traders implement when identifying a Bullish Engulfing ...

    A bullish engulfing pattern is a chart pattern formed when the body of an up candle completely engulfs the body of a down ... Read Full Answer >>
Hot Definitions
  1. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  2. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  3. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  4. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  5. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
Trading Center