Bullish Engulfing Candlestick Pattern — How to trade them

Bullish engulfing pattern

This is a two-day reversal pattern with bullish implications. On the first day of this pattern is a red candlestick, the next day is a larger green candlestick that opens lower than the previous candle and closes above the first candle.

How to recognize it?

• The first candle of this pattern has a smaller body.
• The second candlestick completely engulfs the first candlestick.
• The second candlestick price opens lower than the first day and closes above the first day.

How to trade?

The bullish engulfing pattern is one of the most reliable candlestick patterns out there. It’s a strong signal that the bears are losing control and the bulls are taking over. Here’s how you can trade it:

1. Look for the pattern to form after a period of bearishness. The engulfing candle should be a big, bold candle that completely engulfs the previous candle.
2. Enter a long position when the pattern is confirmed. The pattern is confirmed when the next candle closes above the engulfing candle’s high.
3. Place a stop loss just below the low of the engulfing candle.
4. Profit targets can be set at previous resistance levels or Fibonacci levels.

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