The Bearish Engulfing Pattern

The bearish engulfing pattern is a two-day candle pattern that can be used to identify a potential trend reversal. It typically starts with a small white candle on the first day, followed by a large black candle on the second day. The black candle completely engulfs or overlaps the previous day's candlestick, indicating that bears have taken control of the market from bulls.

To confirm the downtrend, the next candle needs to close lower than the bearish engulfing pattern. This pattern can be considered a reliable signal when it forms at the end of an uptrend. Black candles typically open higher than white candles and close lower than white candles that formed on the previous day, indicating a decrease in buying pressure.

Overall, the bearish engulfing pattern suggests that the market sentiment has shifted from bullish to bearish. Traders can use this pattern as a signal to potentially sell or short a security.