Bullish engulfing as its name says is one of the bullish candlestick patterns.
It happens in a downtrend and has reversal character.
At first, this may be confusing formation since we have two big candlesticks, the first one is red and the second one is green.
What is bullish in this pattern?
Let’s try to merge these 2 candlestick to see what will form.
When we merge these two candlesticks, we get a candlestick we covered in a couple of lessons before.
Yeah, bullish pinbar.
Maybe, now it is easier to understand the story and reason why this formation is considered bullish.
To form bullish engulfing, the green candlestick has to engulf the red one.
It means that the opening of the green candlestick has to be at or below closing of the red candlestick.
The closing price of the green one has to be above the opening of the red candlestick.
These are the two main rules.
You can come across articles where they say the low of the green one has to be below the low of the red one and that the high of the green one has to be above the high of the red one.
If that happens, we have a very bullish situation.
However, even with only two main rules, the pattern is quite bullish.
Milos is an independent trader, with a background in journalism and publishing. Nomadic by nature, he’s lived in four different countries this decade. He’s fascinated by Blockchain technologies’ potential to reshape all aspects of our lives. Milos got into Bitcoin while completing his degree and hasn’t looked back since, writing about anything crypto-related. He is the co-founder of the Cryptoaims and he has a strong passion to educate people about this revolutionary technology.