Concept
Engulfing Patterns
An engulfing pattern is a two-candle shape where the second candle’s body fully covers the first candle’s body and closes on the opposite side. Bullish and bearish versions are mirror images.
How to read it
- The second candle opening beyond the first’s close and finishing beyond its open means the period reversed the previous one entirely.
- It is a two-bar relationship, so it describes a comparison rather than a single period.
- Some definitions require the second body to engulf only the first body; others require the full range including wicks. These produce different pattern counts on the same chart.
What it does not tell you
- On any liquid instrument the shape occurs regularly. Frequency limits how much it can distinguish.
- The definitional ambiguity between bodies and full range means two traders scanning identical data will disagree on how many occurred.
- The pattern says nothing about what follows. It describes two periods that have already completed.
Frequently asked questions
What is a bullish engulfing pattern?
A two-candle shape where the second candle closes above the first candle’s open and opens below its close, so its body covers the previous body entirely.
Does the wick have to be engulfed too?
Definitions differ. Some require only the bodies to be covered; others require the entire range. This is a genuine ambiguity, and it changes how many instances you find.
How reliable are engulfing patterns?
They occur frequently and are followed by a wide range of outcomes. The pattern describes the relationship between two completed periods; it carries no information about the next one.
What is the difference between engulfing and harami?
They are inverses. In an engulfing pattern the second candle covers the first; in a harami the second sits inside the first.
Related
- How to Read a Candlestick — Concept
- Hammer and Hanging Man — Concept
- Spinning Top, Marubozu and Harami — Concept
Educational use only
This page is educational material about how a technical tool is calculated and read. It is not investment advice, not a recommendation to buy or sell anything, and not a signal service. No indicator predicts future prices. CernoQuant is a trading journal and analytics platform, not a SEBI-registered investment adviser. Trading decisions and their outcomes are yours alone.
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