Engulfing Pattern

An engulfing pattern occurs when the price movement for the day completely moves beyond the previous day’s candle. Depending on the position, it is called either a bullish engulfing pattern (at the bottom) or a bearish engulfing pattern (at the top). In this pattern, the stock opens below (above) the previous candle and then proceeds past the previous day’s high (low) and closes near the high (low). Thus it completely “engulfs” the previous candle.