We covered the bullish engulfing, so it’s only fair that we also explain the bearish one, right? Right!
So, the bearish engulfing is a two-candlestick reversal pattern signalling the end of an uptrend or a rally.
The first candle is an ideally small white candlestick, in the direction of the established trend.
The second is a long black candle that opens above the prior close and subsequently closes below the open of the previous white body, signaling the shift of the sentiment and the impending reversal to the downside.
Now the signal here is to sell when the next candle falls below the low of the pattern.
Remember to set a protective stop loss at the high of the pattern to protect your capital!
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