What Are Bullish and Bearish Engulfing Patterns?
Bullish and bearish engulfing patterns are reversal candlestick patterns signals used in technical analysis that reflect a sharp change in short term market control.
A bullish engulfing candle appears when a bearish candle is followed by a larger bullish candle that fully engulfs the prior real body. It usually forms after a decline, a pullback, or a test of support.
A bearish engulfing candle appears when a bullish candle is followed by a larger bearish candle that fully engulfs the prior real body. It usually forms after a rise, a bounce, or a test of resistance.
These patterns show a failed continuation attempt. One side controls the first candle, then loses control completely on the second candle.
What Are the Components and Price Action Mechanism of Bullish and Bearish Engulfing?
The core structure is the same in both patterns, but the direction of control shifts is reversed.
A bullish engulfing candle has two components. The first candle is bearish and the second candle is bullish and large enough to engulf the first candle’s real body, showing that buyers have taken control.
A bearish engulfing candle also has two components. The first candle is bullish and the second candle is bearish and large enough to engulf the first candle’s real body, showing that sellers have taken control.
The price action mechanism is what gives the pattern value. In a bullish engulfing, sellers push price lower first, but buyers then absorb that pressure and close strongly to reverse the move. In a bearish engulfing, buyers push price higher first, but sellers then overwhelm that demand and force price lower into the close.
A strong engulfing pattern always has a decisive second candle close. In a bullish engulfing, a close near the high shows stronger buyer control. In a bearish engulfing, a close near the low shows stronger seller control.
Important
Engulfing usually refers to the real body, not necessarily the full high to low range of the prior candle.
How to Trade a Bullish Engulfing Candle With Real World Example
Traders use the pattern by identifying it in the right context, confirming quality, and then defining entry, stop loss, and profit targets.
This is EURUSD’s historical price data on the 4 hour timeframe, showing a bullish engulfing forming on 01 Aug 2025 after a clear selloff into a local low.
Example: EUR/USD printed an engulfing candlestick pattern, marking a sharp shift from seller control to buyer control, then price broke higher and eventually reached TP2 on 07 Aug 2025. From the reversal area to TP2, the move covered about 0.02446, or 2.14 percent, over 23 candles excluding the engulfing candle itself.
Identify
The setup begins with a clear bearish move, which gives the pattern proper reversal context. Near the low, a small bearish candle prints first, followed by a larger bullish candle that fully engulfs its real body and closes strongly.
That second candle is the bullish engulfing and signals that buyers have absorbed the selling pressure and taken short term control.
What Confirmation Signals Improved Reliability in this Trade?
This pattern became more reliable because it formed after a visible decline and at a local low, not in random sideways price action. The engulfing candle was large and decisive, which shows strong rejection of lower prices and a genuine shift in momentum.
The next confirmation comes from follow through. After the engulfing candle forms, price pushes above the nearby base instead of stalling inside it. That price acceptance is important because it shows buyers are still active after the initial reversal signal. Breakout volume can add confidence when participation expands as price leaves the pattern, but the main confirmation in this example is the clean move out of the base and the continuation that follows.
Entry
The entry is placed above the immediate base rather than at the exact low of the pattern. This makes the trade more selective because price has to break above nearby structure before the setup is confirmed.
In other words, the engulfing candle creates the signal, but the entry waits for proof that the reversal is actually starting to develop.
Stop Loss
The stop loss is placed below the wick low of the engulfing candle. That level makes structural sense because a move back below that low would weaken the reversal idea and suggest that sellers are regaining control.
It also keeps the invalidation point tied to the actual pattern instead of using an arbitrary distance.
Pro Tip
If the stop below the pattern makes the trade too large for the account risk limit, the better decision is to skip the setup.
Take Profit 1, Take Profit 2
TP1 is set at the first reaction high after the breakout. This is the first logical area to reduce risk or secure partial profit because price reaches an initial resistance zone and starts to pause there.
TP2 is set at the higher resistance level reached after price consolidates and then continues upward. In this example, price reaches TP2 on 07 Aug 2025, 23 candles after the engulfing candle formed on 01 Aug 2025.
That move, which measured about 0.02446 or 2.14 percent, shows how a bullish engulfing can lead to a larger upside continuation when the pattern forms in the right context and receives confirmation after the reversal.
Bullish Engulfing vs Bearish Engulfing Candlestick Patterns
The two patterns use the same logic, but one signals possible upside reversal and the other signals possible downside reversal.
Bullish engulfing forms after a decline and suggests buyers may be taking control. Bearish engulfing forms after a rise and suggests sellers may be taking control.
The structures are mirror images. In a bullish engulfing, the first candle is bearish and the second candle is bullish. In a bearish engulfing, the first candle is bullish and the second candle is bearish.
The best location is also reversed. Bullish engulfing is stronger near support, after weakness, or within a broader uptrend pullback. Bearish engulfing is stronger near resistance, after strength, or within a broader downtrend pullback.
The execution logic is similar in both cases. Traders still need clear structure, strong context, confirmation, and enough room for price to move before the next barrier.
What Are the Limitations of Bullish and Bearish Engulfing Candles?
These patterns can signal a reversal, but they do not guarantee one.
A bullish engulfing candle can fail in a strong downtrend when the pattern produces only a short bounce before sellers return. A bearish engulfing candle can fail in a strong uptrend when the pattern produces only a shallow pullback before buyers regain control.
Both patterns are weaker in choppy markets. If they form in the middle of a range, away from meaningful support or resistance, they can become unreliable.
These patterns work best as part of a structured trade plan. They are signals of possible reversal, not standalone reasons to enter a trade.
Check More Neutral Candlestick Patterns
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Neutral Pattern | Features |
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Doji Pattern | The doji is a single candle that opens and closes at or near the same price, which shows indecision between buyers and sellers. 1. The body is very small or appears as a thin line. 2. The upper and lower shadows can be any length. 3. A doji after a strong trend can warn of a reversal, and traders wait for the next candle to confirm the reversal. |
Pin Bar Pattern | The pin bar is a single-candle reversal pattern that can be bullish or bearish. 1. The candle has a small body at one end of its range. 2. One long shadow, called the tail, makes up most of the candle range. 3. A bullish pin bar has a long lower shadow, and a bearish pin bar has a long upper shadow. |
Marubozu Pattern | The marubozu is a single candle with a long body that shows strong buying or strong selling. 1. The candle has a long body. 2. The candle has no upper or lower shadow, or only very small shadows. 3. A bullish marubozu opens at the low and closes at the high, and a bearish marubozu opens at the high and closes at the low. |
Harami Pattern | The harami is a two-candle reversal pattern that can be bullish or bearish. 1. The first candle is a large candle. 2. The second candle is a small candle with a body that sits completely inside the body of the first candle. 3. A bullish harami forms after a downtrend, and a bearish harami forms after an uptrend. |
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Inside Bar Pattern | The inside bar is a two-candle pattern that can signal a continuation or a reversal. 1. The first candle is a large candle, often called the mother bar. 2. The second candle has a high and low that stay inside the high and low of the first candle. 3. Traders trade the breakout above the high or below the low of the first candle. |
Morning Star and Evening Star Pattern | The morning star and evening star are three-candle reversal patterns, one bullish and one bearish. 1. The first candle is a long candle in the direction of the existing trend. 2. The second candle is a small-bodied candle that can be bullish or bearish. 3. The third candle is a long candle in the opposite direction that closes past the midpoint (50%) of the first candle body. 4. A morning star forms after a downtrend, and an evening star forms after an uptrend. |
Check More Bearish Candlestick Patterns
Bearish Pattern | Features |
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Hanging Man Pattern | The hanging man is a single-candle bearish reversal pattern that forms at the top of an uptrend. 1. The candle has a small body at the top of its range. 2. The lower shadow is at least twice the length of the body. 3. The candle has little or no upper shadow. |
Shooting Star Pattern | The shooting star is a single-candle bearish reversal pattern that forms after an uptrend. 1. The candle has a small body at the bottom of its range. 2. The upper shadow is at least twice the length of the body. 3. The candle has little or no lower shadow. |
Bearish Engulfing Pattern | The bearish engulfing is a two-candle bearish reversal pattern that forms after an uptrend. 1. The first candle is a small bullish candle. 2. The second candle is a larger bearish candle with a body that completely engulfs the body of the first candle. |
Bearish Harami Pattern | The bearish harami is a two-candle bearish reversal pattern that forms after an uptrend. 1. The first candle is a large bullish candle. 2. The second candle is a small candle, usually bearish, with a body that sits completely inside the body of the first candle. |
Dark Cloud Cover Pattern | Dark cloud cover is a two-candle bearish reversal pattern that forms after an uptrend. 1. The first candle is a long bullish candle. 2. The second candle is a bearish candle that opens above the close of the first candle. 3. The second candle closes below the midpoint (50%) of the first candle body. |
Tweezer Top Pattern | The tweezer top is a two-candle bearish reversal pattern that forms at the end of an uptrend. 1. The first candle is a bullish candle. 2. The second candle is a bearish candle. 3. Both candles have the same, or nearly the same, high. |
Evening Star Pattern | The evening star is a three-candle bearish reversal pattern that forms after an uptrend. 1. The first candle is a long bullish candle. 2. The second candle is a small-bodied candle that can be bullish or bearish. 3. The third candle is a long bearish candle that closes below the midpoint (50%) of the first candle body. |
Three Black Crows Pattern | Three black crows is a three-candle bearish reversal pattern that forms after an uptrend. 1. Three long bearish candles with small shadows form in a row. 2. Each candle opens inside the body of the previous candle. 3. Each candle closes lower than the previous candle. |
Check More Bullish Candlestick Patterns
Bullish Pattern | Features |
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Hammer Pattern | The hammer is a single-candle bullish reversal pattern that forms after a downtrend. 1. The candle has a small body at the top of its range. 2. The lower shadow is at least twice the length of the body. 3. The candle has little or no upper shadow. |
Inverted Hammer Pattern | The inverted hammer is a single-candle bullish reversal pattern that forms after a downtrend. 1. The candle has a small body at the bottom of its range. 2. The upper shadow is at least twice the length of the body. 3. The candle has little or no lower shadow. |
Dragonfly Doji Pattern | The dragonfly doji is a single-candle bullish reversal pattern that forms at the bottom of a downtrend. 1. The open and close are at or near the high of the candle. 2. The candle has a long lower shadow. 3. The candle has little or no upper shadow. |
Bullish Engulfing Pattern | The bullish engulfing is a two-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a small bearish candle. 2. The second candle is a larger bullish candle with a body that completely engulfs the body of the first candle. |
Bullish Harami Pattern | The bullish harami is a two-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a large bearish candle. 2. The second candle is a small candle, usually bullish, with a body that sits completely inside the body of the first candle. |
Piercing Line Pattern | The piercing line is a two-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a long bearish candle. 2. The second candle is a bullish candle that opens below the close of the first candle. 3. The second candle closes above the midpoint (50%) of the first candle body. |
Bullish Kicker Pattern | The bullish kicker is a two-candle bullish reversal pattern that shows a sudden change from selling to buying. 1. The first candle is a bearish candle. 2. The second candle is a bullish candle that gaps up and opens at or above the open of the first candle. 3. The bodies of the two candles do not overlap. |
Tweezer Bottom Pattern | The tweezer bottom is a two-candle bullish reversal pattern that forms at the end of a downtrend. 1. The first candle is a bearish candle. 2. The second candle is a bullish candle. 3. Both candles have the same, or nearly the same, low. |
Morning Star Pattern | The morning star is a three-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a long bearish candle. 2. The second candle is a small-bodied candle that can be bullish or bearish. 3. The third candle is a long bullish candle that closes above the midpoint (50%) of the first candle body. |
Bullish Abandoned Baby Pattern | The bullish abandoned baby is a three-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a long bearish candle. 2. The second candle is a doji that gaps down below the first candle. 3. The third candle is a long bullish candle that gaps up above the doji. |
Three White Soldiers Pattern | Three white soldiers is a three-candle bullish reversal pattern that forms after a downtrend. 1. Three long bullish candles with small shadows form in a row. 2. Each candle opens inside the body of the previous candle. 3. Each candle closes higher than the previous candle. |
Three Inside Up Pattern | The three inside up is a three-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a large bearish candle. 2. The second candle is a small bullish candle that stays inside the first candle body and closes above the midpoint (50%) of the first candle body. 3. The third candle is a bullish candle that closes above the open of the first candle. |
Three Outside Up Pattern | The three outside up is a three-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a bearish candle. 2. The second candle is a bullish candle with a body that completely engulfs the body of the first candle. 3. The third candle is a bullish candle that closes above the close of the second candle. |
