A candle whose body completely covers the prior candle's body in the opposite direction, often read as a shift in control.
A bullish engulfing candle opens below the prior close and closes above the prior open after a decline. A bearish engulfing does the reverse after a rise. The idea is that one side has overwhelmed the other within a single period.
Like all single-candle patterns, it works better at meaningful levels and on higher timeframes, and it fails often. Traders usually pair it with support, resistance, or volume for confluence.
Example: yesterday's candle was $50.20 to $49.60 (down). Today opens at $49.50 and closes at $50.60, engulfing the prior body on twice the average volume.
Original diagrams for the ideas on this page. Illustrative, not real market data.
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. 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.
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