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What is Bullish Engulfing Pattern?
The bullish engulfing pattern is a white candlestick that closes higher than the previous day's open. It can be identified when a small black candle indicates a bearish trend, then the next day is followed by a large white candle, which indicates a bullish trend. This pattern is often also contradictory to the bearish engulfing pattern.
Characteristics of Bullish Engulfing Formation
Types of Bullish Trend Patterns and Examples and Conditions
bullish engulfing candle consists of 2 candle formations marked with candles A and B as below. The first candle (A) must be a down candle, colored red in the charting package (or black if using a black/white design). The size of the red candle can be large or small, the key to the pattern is the size of the 2nd candle. The 2nd candle (B) must block or overlap the first candle.
Technically, this means that the opening price of the 2nd candle must be lower than the closing price of the first candle, however, in the crypto market, there are no openings or closings during the trading period. You can also transfer crypto coins 24 hours a day and 7 days a week. As a result, the second candle only needs to precede and close the first candle.
The first candle (A) must be a candle that goes down, and is colored red on the charting section. The size of the red candle in this case can be large or small, the key to the pattern is the size of the second candle.
Definition & Types of Candlesticks You Need to Know
What Does the Bullish Engulfing Candlestick Pattern Tell Us?
Bullish engulfing candles cannot be interpreted simply as a white candle pattern that represents an upward price trend movement, while black candles represent a downward price movement. In order for the pattern to remain formed, the stock must first open at a lower price on the 2nd day than the close of the 1st day. If the price does not have a gap to go down, then the body of the white candle will not have a chance to precede the body of the black candle.
Because both stocks opened lower than the 1st day and closed on the 1st day and closed higher than they opened on the 1st day. The white candle in the bullish engulfing pattern represents a day where the bearish controlled the stock price.
The white candle or candle from this pattern usually has a small upper wick. If there is, it means that the stock closed or approached the highest price, this is also an indication that the day ended when the price was still in the upper position.
The lack of an upper wick makes it possible that the next day will produce a white candle that will close higher than the pattern closed. However, it is also possible that the next day will produce a black candle after a gap up at the open. Since this pattern tends to signal a reversal in the market trend, analysts pay special attention to it.
Weaknesses of Engulfing Pattern
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