Bullish Engulfing
A Bullish Engulfing pattern is a two-candle reversal where a green candle completely engulfs the body of the previous red candle, signalling that buyers overwhelmed sellers in a single session.
What it measures
Candle 1 is red (close < open). Candle 2 is green (close > open) and its body strictly contains candle 1's body — candle 2 opens at or below candle 1's close and closes at or above candle 1's open. The larger candle 2 is relative to candle 1, the stronger the signal.
Parameters
| Name | Default | Range | Note |
|---|---|---|---|
| min_body_ratio | 1.5 | 1.0–3.0 | Candle 2's body must be at least this multiple of candle 1's body. Higher values require more decisive engulfing. |
| require_downtrend | true | true, false | Restrict signals to candles printed after a downtrend (e.g., below a moving average). Filters out engulfing patterns in ranges where they mean nothing. |
How it behaves
Bullish engulfing at the bottom of a downtrend, especially at a validated support level, is one of the most reliable single-signal reversal cues. The larger the engulfing candle relative to the prior series, and the higher the volume on it, the more decisive the reversal.
When it misleads
In ranges, engulfing candles fire on every rotation and mean nothing directionally. In strong downtrends without a support level nearby, the engulfing candle often marks a countertrend bounce that fails within 1–3 sessions. Require: a downtrend context, a level (prior support, moving average, VWAP), and ideally a confirming close on the next candle before entering.
Backtest result
Sourced backtest in preparation — we're running the rule on our own historical candles before publishing numbers we can stand behind.
FAQ
- Does the engulfing candle need to cover the wicks?
- Classical definition: bodies only. Stricter traders require the engulfing candle to cover the previous candle's wicks too, which produces fewer but higher-conviction signals.
- Bullish Engulfing vs Piercing Pattern?
- Piercing Pattern is the weaker cousin — candle 2 closes above the midpoint of candle 1, but not above its open. Engulfing fully reverses the prior candle; Piercing only partially does.
- Which timeframe is most reliable?
- Daily and 4-hour, because each bar aggregates more information. Lower timeframes produce many engulfing candles that are just intraday oscillation.
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