The engulfing candle stick patterns are a two-day time frame candle stick pattern that is formed in the daily candle sticks. This candle stick pattern is a two-day time frame candle stick pattern observed in the charts. There can be a bullish engulfing pattern or a bearish and bearish engulfing candle stick pattern formed in this 2-day time frame.
Let us look at the basic formation of an engulfing candle stick pattern.
Day 1 = On day one, the candle is formed either a red candle or green candle with a smaller body and along with small wicks.
Day 2 = On this day the first candle will be opposite to the previous day’s last candle stick formed. The day 2-day candle will engulf the previous day’s last candle stick.
Let’s look at the two types of Engulfing patterns
- Bullish Engulfing candle stick
- Bearish Engulfing candle stick
Bullish Engulfing candle stick pattern
The bullish engulfing candle stick pattern is a two-day time-two candle stick pattern. In this type, a small red candle stick and a large green candle stick are formed.
Day 1 = On day 1, a small red candle stick is formed with a small body along with small wicks. This candle will be the last candle stick of the day.
Day 2 = On day 2, the first candle will be a large green candle stick that opens below the previous day’s close and totally engulfs the red candle.
Bearish Engulfing candle stick
The bearish candle stick pattern is also similar to a bullish engulfing candle stick pattern. In this type, a small green candle stick with smaller wicks and a larger red candle stick is formed.
Day 1 = On day one, the chart closes with a small green candle stick along with smaller wicks.
Day 2 = On day two, the chart opens with a strong red candle stick that opens above the previous day’s last green candle stick and closes way below the previous candle stick.
The engulfing candle stick patterns are used to observe the market trends and to capture the market movements.
