SkyTrade
Sign up
FeaturesPlatformSecuritySign in
Glossary · Candlestick patterns

Engulfing pattern

A two-candle reversal pattern in which the second candle's body completely covers the first candle's body in the opposite direction.

By Sky Trade editorial teamUpdated

An engulfing pattern consists of two candles of opposite colour. In a bullish engulfing, a bearish candle is followed by a bullish one whose body opens at or below the first close and closes above the first open, swallowing the previous body. A bearish engulfing is the reverse, at the top of a rise.

The pattern is read as a sudden change of control: one side dominated the first candle, the other dominated the second by a wider margin. Its strength depends on:

  • the preceding move, since it needs a trend to reverse;
  • the location, ideally at support or resistance;
  • the size of the engulfing body compared with recent candles.

On continuous forex charts the second candle usually opens exactly where the first closed, so traders judge engulfing by the bodies alone. The pattern is common on short timeframes, and the more common a pattern is, the less each occurrence means.

Engulfing candles also appear in the middle of ranges, where they mostly reflect noise. Use them as a timing signal within a plan, not as a reason to trade on their own. See engulfing patterns and reversal pattern.

Example

At support near 1.2620, a GBP/USD M5 candle falls from 1.2630 to 1.2622. The next opens at 1.2622 and closes at 1.2637, covering the whole previous body: a bullish engulfing at a level.

Learn more in the academy

Related terms

Practise first, then decide

Every Sky Trade account comes with a $10,000 demo balance on the same prices and payouts as the real account. Create an account or read how the demo works.

Create an accountAbout the demo account