Bearish Engulfing Practice
The bearish engulfing is the mirror of the bullish version — a warning that an up-move may be running out of buyers. Train your eye to find it only where it counts: at the top of a rally.
A bearish engulfing forms after an advance. A small up (green) candle is followed by a larger down (red) candle whose body fully covers the prior body — open above the previous close, close below the previous open. Sellers have taken control from buyers.
How to spot it
- ✓ Price has been rising into the pattern — an exhausted rally, not a flat range.
- ✓ Candle one is an up candle with a modest body.
- ✓ Candle two opens at or above candle one's close and closes below candle one's open.
- ✓ The red body engulfs the green body — judge by the bodies, not the wicks.
- ✓ Bonus confirmation: a rejection from resistance or a spike in volume.
⚠️ Common mistake
Traders often short the first bearish engulfing inside a strong uptrend. One bearish bar inside a healthy trend is frequently just a pause — wait for the context (resistance, divergence) to agree.
FAQ
How is it different from a dark cloud cover?
A dark cloud cover only closes partway into the prior body; a bearish engulfing closes all the way below the prior open. The engulfing is the stronger of the two.
Should I act on it immediately?
Most traders wait for the next candle or a break of the pattern low for confirmation, and always use a stop. This page is for practice and is not financial advice.