Bullish Engulfing

What is the Bullish Engulfing?

The Bullish Engulfing appears at the bottom of a downtrend. Two consecutive candles:

Candle 1: bearish (close below open). Candle 2: bullish (close above open), with a body that fully covers Candle 1's body.

The pattern signals that the previous session's selling was overwhelmed by aggressive buying in the next session. The engulfing nature — the second candle's body fully covering the prior body — is what gives the signal its strength.

How to identify a Bullish Engulfing

Three requirements:

1. Pattern appears at the bottom of a clear downtrend (not in a range or mid-trend). 2. The second candle's body opens at or below the first candle's close. 3. The second candle's body closes at or above the first candle's open.

Wicks do not need to engulf — only the bodies. The second candle should be visibly larger than the first. A 1.5x or 2x body-size ratio is a stronger signal. Most reliable at horizontal support levels or major dynamic levels (200 EMA).

How to trade the Bullish Engulfing

Standard entry.

Confirmation entry: Enter long at the close of the second (bullish) candle. Stop loss below the second candle's low. First target at the previous swing high or 1.5-2x stop distance.

Retest entry: Sometimes price pulls back to the midpoint of the engulfing candle before continuing higher. Entry on the retest of the midpoint, with a tighter stop below the recent swing low.

Bullish Engulfings at horizontal support with RSI bullish divergence produce some of the highest win-rate reversal setups in price action. Pattern alone is decent; pattern + confluence is excellent.

More patterns and definitions in the forex glossary, or see them stacked on real charts in the trading blog.

Bullish Engulfing FAQ