Bullish Engulfing

Bullish Engulfing Candle

The bullish engulfing candle pattern is made up of two candles, with the second green candlestick entirely engulfing the preceding red candle's body. When it appears at the bottom of a downtrend, the bullish engulfing candle implies a reversal of the downtrend and a spike in purchasing pressure. As more buyers enter the market and drive prices upward, this pattern prompts a reversal of the current trend (downtrend).

The Engulfing Candlestick Pattern

An engulfing candlestick is a form of multiple candlestick patterns that typically indicates a market trend reversal. This candlestick design consists of two candles, the second of which engulfs the entire body of the first. Based on where it occurs in respect to the current trend, the engulfing candlestick can be bullish or bearish.

What do bullish engulfing patterns tell you?

Engulfing candles aid traders in recognizing trend reversals, indicating trend continuation, and providing an exit signal, which we will explore shortly. The first is trend continuation, engulfing patterns encourage trend continuation. When a bullish engulfing pattern appears in an uptrend, for example, it signals that the trend will continue. Then there are reversals. 

Bullish engulfing patterns indicate a trend reversal. When a bullish engulfing pattern appears at the bottom of a downtrend, it indicates that the trend will reverse.  

The exit strategy is next, If a trader is holding a buying or selling position and the current trend is coming to an end, this pattern can be utilized as a signal to exit. It implies the likelihood of a reversal.

Characteristics of a Bullish Engulfing Pattern

• It usually happens near the end of a downward trend.
• When it is formed after three bearish candlesticks and the subsequent candle closes above the peak of the bullish engulfing candle, it sends a stronger indication.
• The preceding red (Bearish) Candlestick is engulfed by a green (Bullish) Candle.
• The preceding candlesticks, as well as the two candlesticks that make up the bullish engulfing pattern, should be examined by investors. This broader backdrop will help determine whether the bullish engulfing pattern is a legitimate trend reversal.

It is more likely to predict a reversal when four or more red candlesticks precede a bullish engulfing pattern. The more red candlesticks the bullish engulfing (green) candle engulfs before closing higher than the bullish engulfing candle, the greater the likelihood of a trend reversal emerging, which is verified by a second green candlestick ending higher than the bullish engulfing candle.

For example, a bullish engulfing candle pattern developed in the BNB 4H period after two consecutive bearish candlesticks formed in a downtrend, and when the bearish candle was engulfed, the price reversed and proceeded in an uptrend.

 How to Identify Bullish Engulfing Pattern

Both candles should be average, and the green candles should be between 120 and 140 percent to get a success rate of around 100 percent. In comparison to red, both sides should have an upper and lower wick; these three characteristics are crucial in identifying 100 percent. Other indicators should be utilized to complement the perfect bullish engulfing formation.  

The wicks of the red and green candles are both small here. As a result, the success rate of these patterns is roughly 85%. Some of the candles do not have wicks on one or both sides. So these patterns have a success rate of roughly 75%. 

Because there are no wicks on each side, this design has a 65 percent success probability. It is 100 percent in this photo. Because the green candles contribute between 120 and 140 percent to the completion of the red, it's ideal. Also, note that just because it's a bullish engulfing pattern doesn't imply it is enough reason to be traded without other indicators.

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