What is Bullish Engulfing?

Bullish Engulfing is a two-candle bullish reversal pattern. The first candle is a bearish (red/black) candle with a short body. The second candle is a strong bullish (green/white) candle that completely engulfs the body of the first candle. This pattern appears at the end of a downtrend, signaling that buyers are taking control and price is likely to rise.

How to Identify

First candle: short body, bearish (red).

Second candle: long body, bullish (green).

The green candle's body must fully cover the red candle's body. Shadows are ignored – only the real bodies matter.

The pattern occurs after a clear downtrend (at least a few bearish candles before).

After explaining the shape, see the illustration:

How to Trade

Entry

Place a Buy order immediately after the second candle closes.

Or wait for a third bullish candle to confirm.

Stop Loss

Set SL below the low of the second candle (or below the pattern's lowest point for extra safety).

Take Profit

Measure the height of the pattern (from highest to lowest of the two candles) and add it to entry price. Or set TP at the nearest resistance level.

Real Example

Imagine EUR/USD drops from 1.1000 to 1.0950. On day 2, a small bearish candle (10 pip body). On day 3, a long bullish candle (30 pip body) completely engulfs the previous body. You enter Buy at 1.0955, SL at 1.0920 (below the green candle's low), TP at 1.0985 (adding 30 pips). Price rises to 1.0990 – you profit.

Common Mistakes

Trading without a clear downtrend: Pattern is only reliable after a downtrend.

Ignoring volume: Low volume weakens the signal.

Skipping confirmation: Entering immediately without a third candle can lead to early stops.

Confusing with Piercing pattern: In Piercing, the green candle closes above 50% of the red body; Engulfing requires full coverage.

Content is for reference only, not investment advice. Forex trading carries high risk.

Bullish Engulfing Candlestick Pattern