Engulfing
Reversal2 candlesA two-candle reversal pattern where the second candle completely engulfs the first, signaling a strong momentum shift.
Visual Example
When It Usually Fails
This is what most courses don't teach you. These conditions turn textbook patterns into losing trades.
- Weak engulfing (barely covers prior candle)
- No volume increase on engulfing candle
- Occurs mid-trend without key level
- Prior candle was already very small (easy to engulf)
Why Engulfing Often Fails (67%)
This pattern doesn't fail because of the pattern itself. It fails when context is wrong.
Market Regime
Bullish engulfing appears in established downtrend
Example: Market has been making lower lows for weeks. Bullish engulfing tries to reverse trend at resistance. Downtrend continues. Counter-trend trades fail 67% of the time.
Location
Engulfing occurs mid-trend without structure
Example: Pattern forms in middle of uptrend, no nearby support or resistance. No reason for reversal. Price continues trending.
Order Flow
No volume increase on engulfing candle
Example: Engulfing pattern looks perfect visually, but volume is below average. No real momentum shift. Fake breakout.
Key insight: The same Engulfing that fails 67% of the time in wrong context can succeed 68%+ when all three factors align.
When It Usually Works
- Second candle has significantly higher volume
- Engulfing happens at key support/resistance
- Clear prior trend exists to reverse
- Engulfing body is large relative to recent candles
Common Traps
Weak engulfing
Just barely covers - not conviction
Low volume engulfing
No real momentum behind it
Engulfing a doji
Engulfing nothing meaningful
Historical Statistics
Based on analysis of historical data. Past performance does not guarantee future results.
Note: These statistics are for educational purposes. Individual results vary based on market conditions, timing, and risk management.
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Bullish Engulfing
Large bullish candle completely engulfs previous bearish candle body.
Trading every engulfing without checking location and trend context.
More significant at support after a decline; size relative to recent candles matters.
Key Concepts:
Bearish Engulfing
Large bearish candle completely engulfs previous bullish candle body.
Ignoring that engulfing in a strong trend often fails.
More significant at resistance after a rally; watch for volume confirmation.
Key Concepts:
Training Note: Pattern variants are educational classifications. Real-world price action rarely matches textbook definitions exactly. Always evaluate patterns in context of regime, location, and volume.
Practice This Pattern
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