As of 10/07/2024
Indus: 41,954 -398.51 -0.9%
Trans: 15,783 -31.37 -0.2%
Utils: 1,027 -24.05 -2.3%
Nasdaq: 17,924 -213.95 -1.2%
S&P 500: 5,696 -55.13 -1.0%
|
YTD
+11.3%
-0.7%
+16.5%
+19.4%
+19.4%
|
 43,500 or 41,600 by 10/15/202416,800 or 15,700 by 10/15/20241,125 or 1,025 by 10/15/202419,000 or 17,600 by 10/15/20245,900 or 5,600 by 10/15/2024 |
As of 10/07/2024
Indus: 41,954 -398.51 -0.9%
Trans: 15,783 -31.37 -0.2%
Utils: 1,027 -24.05 -2.3%
Nasdaq: 17,924 -213.95 -1.2%
S&P 500: 5,696 -55.13 -1.0%
|
YTD
+11.3%
-0.7%
+16.5%
+19.4%
+19.4%
| |
|
43,500 or 41,600 by 10/15/202416,800 or 15,700 by 10/15/20241,125 or 1,025 by 10/15/202419,000 or 17,600 by 10/15/20245,900 or 5,600 by 10/15/2024 | ||
My book,
Encyclopedia of Candlestick Charts
If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.
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The bearish engulfing candlestick is one of the more popular and well known candlesticks. It works very well as a bearish reversal, performing that way 79% of the time (ranking 5 out of 103 candlestick types where 1 is best). Unfortunately, the trend after the breakout is short-lived, ranking 91st. Thus, even though price will often reverse, the bearish engulfing candlestick does not imply a lasting reversal.
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Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 79% of the time
Frequency rank: 11
Overall performance rank: 91
Best percentage meeting price target: 76% (bear market, down breakout)
Best average move in 10 days: -5.92% (bear market, down breakout)
Best 10-day performance rank: 21 (bear market, down breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts. The above numbers are based on hundreds of perfect trades. See the glossary for definitions. |
 Bearish Engulfing
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The bearish engulfing candlestick performs best after a downward breakout, but really sucks after an upward one. Compare the ranks of 103 and 100 candles for upward breakouts in a bull/bear market, respectively, with 25 and 21 candles for downward breakouts.
The bullish engulfing candlestick is just like it sounds. In an upward price trend, look for a white candle followed by a black candle the body of which overlaps the body of the white candle. By overlaps, I mean the body of the black candle has an open above the prior close and a close below the prior open. The black body is taller than the white body, and everything appears in an upward price trend. Still confused? Just look at a picture of the ideal bearish engulfing candlestick above.
| Characteristic | Discussion |
| Number of candle lines | Two. |
| Price trend leading to the pattern | Upward. |
| Configuration | Look for a two candle pattern in an upward price trend. The first candle is white and the second is black. The body of the black candle is taller and overlaps the candle of the white body. Shadows are unimportant. |
If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.
The bearish engulfing candlestick appears a A, circled in red, on the daily price chart. In an upward price trend, look for a white candle followed by a black candle. The body of the black candle should engulf or overlap the white candle's body, as shown here. Shadow overlap is not important.
This bearish engulfing candlestick breaks out downward when price closes below the bottom of the candlestick pattern first. Thus, the bearish engulfing candlestick serves as a bearish reversal in this example and in 79% of the other 20,000 that I studied.
Two additional bearish engulfing candlesticks appear at B and C. Candle B acts as another bearish reversal, but C acts as a continuation of the uptrend.
-- Thomas Bulkowski
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