Engulfing

An Engulfing Pattern is a two-candle reversal signal. A bullish engulfing consists of a bearish first candle followed by a bullish second candle whose real body completely covers the first body's range, open below the first close, close above the first open. Bearish engulfing is the mirror image at market tops.

Context matters more than the pattern itself. Engulfing candles in isolation fire constantly and mean little. An engulfing at a significant level, prior swing point, demand/supply zone, 50% FVG. With above-average volume carries real signal. The stop is placed beyond the engulfing extreme; entry is the close of the engulfing candle (aggressive) or a retest of the engulfing midpoint (conservative). The pattern is most reliable on higher timeframes; intraday engulfings below 15-minute are dominated by noise.