Web Trader MT5
A two-candle reversal pattern in candlestick charting. After an uptrend, a small green (up) candle is followed by a larger red (down) candle whose body completely covers, engulfs, the previous green body. The implication is that buyers ran out of conviction at the highs and sellers seized control, often dramatically.
For the pattern to count as a real bearish engulfing, three things should be true. First, there has to be an uptrend in place; the pattern means nothing in a sideways chop. Second, the red candle’s body has to fully engulf the green body (the wicks don’t have to). Third, ideally, volume on the engulfing candle is heavier than recent average, confirmation that the move had real participation behind it, not just thin liquidity.
The pattern is more reliable on higher timeframes. A bearish engulfing on a daily chart of an index near a multi-month high is worth taking seriously. The same pattern on a five-minute chart during a quiet afternoon is just noise.
Example: Reliance Industries in late 2021 printed a clear bearish engulfing pattern on the daily chart at the top of its post-COVID rally, near ₹2,750. Volume was elevated. The stock rolled over in subsequent sessions and didn’t reclaim those highs for over two years.
