{"id":8968,"date":"2021-07-08T18:25:16","date_gmt":"2021-07-08T15:25:16","guid":{"rendered":"https:\/\/roboforex.com/blog\/?p=8968"},"modified":"2026-05-26T10:57:15","modified_gmt":"2026-05-26T07:57:15","slug":"how-to-trade-the-engulfing-pattern","status":"publish","type":"post","link":"https:\/\/roboforex.com/blog\/blog\/2021\/07\/08\/how-to-trade-the-engulfing-pattern\/","title":{"rendered":"How to Trade the Engulfing Pattern?"},"content":{"rendered":"\n

This overview is devoted to the Engulfing pattern; to how it forms and works. This candlestick pattern is easy to note on the chart. It forecasts a reversal of the actual trend.<\/p>\n\n\n\n

<\/span>How does the Engulfing pattern form?<\/span><\/h2>\n\n\n\n

The Engulfing pattern is a reversal candlestick pattern that forms on the local highs and lows of the price chart in an uptrend or downtrend<\/a>. It consists of two candlesticks: the first one has a relatively small body, while the second one is of the opposite color and has a larger body that fully covers (engulfs) the first candlestick.<\/p>\n\n\n\n

In terms of the market behavior, an Engulfing pattern means that the actual trend is losing its power and tempo — the first candlestick demonstrates this. The previous movement loses strength, and the market balance is feeble.<\/p>\n\n\n\n

The appearance of the next mighty candlestick of the pattern that engulfs the previous one and closes in the opposite direction, signifies the beginning of a correction that might even turn into a reversal of the current trend.<\/p>\n\n\n\n

<\/span>Types of the Engulfing pattern<\/span><\/h2>\n\n\n\n

Depending on the color of the second engulfing candlestick, two types of the pattern are sungled out: the Bullish engulfing and the Bearish engulfing.<\/p>\n\n\n\n

<\/span>Bullish engulfing<\/span><\/h3>\n\n\n\n

The pattern forms in a downtrend at the local lows of the price chart. The first small black candlestick of the pattern shows that bears<\/a> are losing power; then a large white candlestick appears, fully engulfing the body of the first one. This means that bulls<\/a> are advancing, feeling the bears' weakness.<\/p>\n\n\n\n

Next thing, the price goes upwards, and an ascending correction starts. This is confirmed by the quotations rising higher than the high of the large bullish candlestick, the second one.<\/p>\n\n\n\n

<\/span>Bearish engulfing<\/span><\/h3>\n\n\n\n

The pattern forms in an ascending impulse at the local highs of the price chart. The first small white candlestick means that bulls are tired and need a pause. The large black candlestick that follows shows that bears are using their chance, counterattacking.<\/p>\n\n\n\n

Then the quotations go down, and a descending correction starts. This is confirmed by falling under the low of the second candlestick, the large and white one.<\/p>\n\n\n\n

\"What<\/a>
What the Engulfing looks like<\/em><\/figcaption><\/figure>\n\n\n\n
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<\/span>Trading the Engulfing<\/span><\/h2>\n\n\n\n

As long as this is a reversal pattern, there must be an ascending or descending price movement before it; an Engulfing in a flat<\/a> should be ignored. Best timeframes<\/a> for trading are larger ones, from H1 and higher. Best assets are high-liquid ones: currency pairs<\/a>, gold<\/a>, oil<\/a>, stocks<\/a>, stock indices<\/a>.<\/p>\n\n\n\n

<\/span>Bullish engulfing — buying<\/span><\/h3>\n\n\n\n

The trading algorithm of the bullish pattern looks as follows:<\/p>\n\n\n\n