Bullish & Bearish Engulfing Candlestick Pattern: How to Identify and Trade

If you're a crypto trader, you know that identifying trends is key to making profits. One of the most popular ways to identify a trend reversal is by looking for the bullish engulfing candlestick pattern. In this article, we'll explain what this pattern is, how to identify it, and how to trade it.

What is the Bullish Engulfing Candlestick Pattern?

The bullish engulfing candlestick pattern is a bullish reversal pattern that appears at the end of a downtrend. It's called "engulfing" because the second candlestick "engulfs" the first one. When you see this pattern, it means that the previous downtrend is over and a new uptrend may be starting.

How to Identify the Bullish Engulfing Candlestick Pattern

To identify the bullish engulfing candlestick pattern, you need to look for two candlesticks. The first candlestick is red, and the second one is a big green candlestick that overlaps the first one. The green candlestick should have a higher high than the red one.

The key to identifying the pattern is to look at the wicks. If the green wick ends below the red one, it means the market dipped down before shooting back up. This dip makes the engulfing pattern signal even stronger, even though it's not necessary.

Bullish & Bearish Engulfing

How to Trade the Bullish Engulfing Candlestick Pattern

Once you identify the bullish engulfing candlestick pattern, it's time to trade it. Here's how:

  1. Wait for a breakout above the high of the right candlestick.
  2. Enter a long position.
  3. Place your stop loss at the swing low of the engulfing pattern.
  4. For your take profit, take the distance between the entry and stop loss and double it.

It's important to note that the bearish engulfing candlestick pattern is the same as the bullish engulfing, but in reverse. When you see the bearish engulfing pattern, it's a bearish reversal pattern that appears at the end of an uptrend. It indicates that the previous uptrend is over and a new downtrend may be starting.

Final Thoughts

In conclusion, the bullish engulfing candlestick pattern is an important tool for crypto traders looking to identify a trend reversal. By understanding how to identify and trade this pattern, you'll be better equipped to make profits in the crypto market. Happy trading!

Watch this video to better understand the concept:

@bittok_crypto_tips (Part 2) - Name 5 More Candlestick Patterns 📊 #cryptotrading #chartpattern #trading #forex #forextrading ♬ original sound - BitTok Crypto Tips

 

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