The Bullish Engulfing Pattern is a reversal pattern characterized by a large green candlestick engulfing a red small candlestick, which appears after a downtrend.
The market has to be clearly in a downtrend. Day one continues the trend with a short red candlestick which suggests that the bears are still in command. The second day is a long green day that engulfs the body of the first day, closing well above the previous days open. This implies that the downtrend is losing momentum and the bulls are taking control.
Intensifying factors:
- The higher the relative signs of the bodies, the stronger the reversal signal.
- If the second day of the engulfing pattern engulfs more than one real body.
- If on the second day there is heavy volume.
[Real-Time Stock Chart via Daily Stocks for iPad]
The Bullish Engulfing pattern is included in our Daily Stocks iPad and Japanese Candlestick iPhone apps.
For a full list of Japanese Candlestick Patterns tracked by these apps visit our Japanese Candlesticks Page.
Three White Soldiers is a group of three green candlesticks with consecutively higher closes (The opposite of the bullish Three White Soldiers pattern is the bearish Three Black Crows). If the pattern appears after low prices, then it is a sign of a strong reversal.
The bullish Morning Star is a three candlestick bottom reversal formation (The opposite of the bullish Morning Star pattern is the bearish Evening Star pattern). It is comprised of a long red body followed by a small body, gapping lower to form a star. The third day is a green body that closes well into the first day’s red body. The third candlestick signals that bulls have seized control.
Bullish Three Outside Up is a three candlestick bottom reversal formation (The opposite of the bullish Three Outside Up pattern is the bearish Three Outside Down). It is another name for the Confirmed Bullish Engulfing Pattern (the third day is the confirmation).
Bullish Three Inside Up is a three candlestick bottom reversal formation(The opposite of the bullish Three Inside Up pattern is the bearish Three Inside Down). It is another name for the Confirmed Bullish Harami Pattern (the third day is the confirmation).
A Bullish Kicking pattern is formed when a long red candlestick (Red Marubozu) is followed by a long green one (Green Marubozu). After the Red Marubozu, market gaps sharply higher on the opening and it opens with a gap above the prior session’s opening thus forming a Green Marubozu.
