Bullish Engulfing Pattern

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

On the next day, though the stock opens below the low of the previous day's real body, the demand tremendously increases to push up the price to a higher level. The second day closes above the high of the real body of the first candle.

For this to occur...

• There has to be a clear down trend, whether major or minor.
• The first candle is usually a black candle signifying an ongoing down trend and the second candle is always a white candle.
• The second day white candle's real body engulfs the first day black 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 down trend in a major up trend.
• If the second day's real body engulfs both body and shadows of the first day, that is first day's complete move.
• If the second day's real body engulfs more than one previous day's real bodies.