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Engulfing Pattern

 

Description

 

This very common bullish reversal pattern is considered moderately reliable.

 

A black candlestick day is engulfed completely by a long white/empty candlestick the next day that gaps below the previous day’s low and then rallies to close above its high.

 

The gap down, in a downtrend, is seen as a point where bulls exit the scene. When the selling ends, shorts rally the stock to close above the previous day’s high. Confirmation is needed by the evidence of higher volume.

 

Market Opinion

 

Bullish.

 

Pattern

 

 

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