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.

  1. Bar Chart

    A style of chart used by some technical analysts, on which, as ...
  2. Outside Reversal

    A price chart pattern in which a security's high and low prices ...
  3. Bearish Harami

    A trend indicated by a large candlestick followed by a much smaller ...
  4. Dark Cloud Cover

    In candlestick charting, a pattern where a black candlestick ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  6. Candlestick

    A chart that displays the high, low, opening and closing prices ...
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. Chart Advisor

    4 European Stocks to Consider Buying

    European companies, listed on US exchanges, that are providing buying opportunities right now.
  8. Chart Advisor

    ChartAdvisor for October 2 2015

    Weekly technical summary of the major U.S. indexes.
  9. Investing

    How Diversifying Can Help You Manage Market Mayhem

    The recent market volatility, while not unexpected, has certainly been hard for any investor to digest.
  10. Technical Indicators

    Why MACD Divergence Is an Unreliable Signal

    MACD divergence is a popular method for predicting reversals, but unfortunately it isn't very accurate. Learn the weaknesses of indicator divergence.
  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 >>

You May Also Like

Hot Definitions
  1. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  2. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  3. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  4. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  5. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  6. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!