Bearish Engulfing Pattern
Definition of 'Bearish Engulfing Pattern'
The bearish engulfing pattern is considered to be a bearish reversal pattern because it suggests that the bulls are losing momentum and the bears are gaining control. The large black candle indicates that the bears were able to push prices down significantly, and the fact that the black candle engulfs the white candle suggests that the bears were able to overcome the bulls' momentum.
The bearish engulfing pattern is not always a reliable indicator of a trend reversal, however. It is important to consider other factors, such as the overall trend, the strength of the pattern, and the volume, before making a trading decision.
Here are some additional things to keep in mind when trading the bearish engulfing pattern:
* The pattern is more likely to be valid if it occurs after a strong uptrend.
* The pattern is more likely to be valid if the black candle has a long lower shadow.
* The pattern is more likely to be valid if there is a high volume spike on the day of the black candle.
If you see a bearish engulfing pattern, it is important to consider all of the factors before making a trading decision. If the pattern is valid, it could be a sign that the trend is about to reverse.
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