Bullish Engulfing

Anatomy

The first candle is a small-to-medium red body. The second is a larger green candle whose real body completely engulfs the first body — opening at or below the prior close and closing at or above the prior open.

Market psychology

After sellers controlled the first candle, buyers showed up with enough force to erase the entire prior body in a single session. That decisive shift in control is the signal.

When it matters

Strongest at the end of a pullback inside an uptrend, or at a tested support after a downtrend. A bullish engulfing after a long rally is weaker because much of the buying may be exhausted.

Common beginner mistakes

• Counting wicks instead of bodies — engulfing is defined by the real body engulfing the prior body, not the wicks.
• Treating it as bullish regardless of location; an engulfing in the middle of a chop range is unreliable.

Frequently asked questions

Do the wicks need to be engulfed too?

No. A standard bullish engulfing requires only the real body of the green candle to engulf the prior red body. If the wicks are also engulfed it is stronger, but it is not required.

Is bullish engulfing a reliable signal?

It is one of the more reliable two-candle reversals when it appears at support or at the end of a pullback in an uptrend, especially with above-average volume on the engulfing candle. In isolation it is just two candles.