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Bearish engulfing

A red candle whose body completely covers the previous green candle's body, showing sellers taking control after an advance.

The mirror of bullish-engulfing: open at or above the prior close, close at or below the prior open, following a rally or occurring at resistance.

What gives it weight is the implication for positioning. Everyone who bought during the previous candle is now at a loss, and their stops sit below, which can feed a move lower.

Quality filters matter. A bearish engulfing where the red body is barely larger than the green one is noise; one where a wide-range red candle swallows three prior candles on double average volume is a real shift. Also check the higher-timeframe: a bearish engulfing on a 5-minute chart inside a strong daily uptrend is usually just a pullback starting.

Related: bullish-engulfing, engulfing-candle, dark-cloud-cover, harami, resistance

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

The parts of a candlestickAn up candle and a down candle with the same high and low, labelled with open, high, low, close, the real body and the wicks.UP CANDLEclose above openHigh 41.00Close 40.30Open 38.20Low 37.40upper wickreal bodyopen to closelower wickDOWN CANDLEclose below openHigh 41.00Open 40.30Close 38.20Low 37.40Same high and low; only the open and close swap places.
The parts of a candlestick. One candle sums up a slice of time: the thick real body runs from the opening price to the closing price, and the thin wicks reach out to the highest and lowest prices traded. Colour tells you which way the body ran.
Support, resistance and the flip between themA price path bouncing three times off a horizontal support line and turning back three times at a resistance line, then breaking above it and settling back onto the same level.RESISTANCESUPPORT62.0056.00breaks aboveold resistance,now supportIllustrative price path: the level stays the same, its role changes.
Support, resistance and the flip. Support is a price where buyers keep stepping in and the fall stops; resistance is a price where sellers keep stepping in and the rise stops. Once price closes above an old ceiling, that same level often acts as the new floor.

Educational only, not advice. Spotted an error? Post in Site Feedback.