Engulfing candle
A candle whose body fully covers the previous one signals a sudden change of control.
What it is
A bullish engulfing pattern is a green candle whose body is larger than and completely covers the previous red candle’s body, typically after a move down. It shows sellers losing control to buyers. A bearish engulfing is the mirror image after a move up.
It is strongest at a meaningful level (support, a discount zone, a sweep of lows) and on higher volume. In the middle of a range it carries little information.
How to use it
- Find the pattern at a support or resistance zone.
- Confirm with volume or a lower-timeframe structure break.
- Enter on a break of the engulfing candle’s high (long) or on a retrace into its body.
- Stop below the low of the pattern; target the next level.
Common mistakes
- Trading every engulfing candle regardless of location.
- Entering without considering the room to the next level.
- Ignoring the trend: counter-trend engulfing candles fail more often.
Practise it in TradeDesk X
The Scanner’s confluence list checks candle confirmation as one of its 20 independent checks and the Micro signal stream requires flow and trend alignment rather than a single candle.
Related lessons
Pin bar (hammer and shooting star)
A long wick shows price was pushed away and rejected. It is a rejection signal at a level.
📈Support and resistance
Prices react at the same zones repeatedly. A broken level often flips its role.