What is a Bearish Engulfing Pattern
In this video, we will be discussing the Bearish engulfing pattern.
Let me walk you through…
In the first candle, you can see that price has opened near the lows.
The buyers stepped in and pushed prices all the way up and closed towards the highs.
Then, the subsequent candle that has opened where it closed previously…
The sellers came in and took price all the way down lower.
Finally closing near the lows!
This is a bearish engulfing pattern because the second candle has engulfed the previous green candle.
What it means is that it’s a bearish reversal pattern.
The sellers are momentarily in control.
The key word is “momentary,” I didn’t say permanently.
The larger it is the more significant the pattern is.
Just to walk you through a few examples
You can see that there are three bearish engulfing, where it opened and then closes near the lows.
Then the body of the subsequent candle is definitely larger and overcame the body of the previous candle.
So, by now I hope you have a good idea of what a bearish engulfing pattern looks like!
With that said, let’s do a quick recap…
A bearish engulfing pattern is a bearish reversal pattern.
Sellers are momentarily in control.
The larger it is, the more significant the pattern is.
Don’t treat this pattern in isolation. Just because you see a bearish engulfing pattern doesn’t mean you go short.