Bearish Engulfing Pattern

Formation
This formation consists of two candles. The first one is white candle, which signifies the ongoing up trend.

On the next day, though the stock opens above the high of the previous day's real body, the supply tremendously increases to pull down the price to a lower level. The second day closes below the low of the real body of the first candle.

For this to occur...

• There has to be a clear up trend, whether major or minor.
• The first candle is usually a white candle signifying an ongoing up trend and the second candle is always a black candle.
• The second day black candle's real body engulfs the first day white candle's real body.

Its importance increases...

• If the first day's real body is very short and second day's real body is very tall.
• If the second day is accompanied by high volume
• If it is a minor up trend in a major down trend.
• If the second day's real body engulfs both body and shadows of the first day, that is sessions complete move.
• If the second day's real body engulfs more than one previous day's real bodies.