Bearish Engulfing

The Bearish Engulfing candle stick pattern is a 2 candle pattern and consists of a smaller Bullish candle followed by a larger Bearish candle whose body fully encloses the body of the previous, smaller bullish candle.

The figure below shows how the bearish engulfing pattern appears. Note that we are only interested in the body of the two candles, not the wicks. If the body of the second, bearish candle engulfs the green body of the smaller bullish candle then the pattern is satisfied.

The screen shot below from Charanna Vyapari's chart viewer shows 5 Bearish Engulfing candles. Note how each candle is marked in the chart.

The bearish engulfing formation is considered a strong indicator that the prior upward momentum is waning and a reversal is on the horizon. A bearish engulfing pattern can occur anytime, but it is more significant if it occurs after a price advance. This could mark the end of the uptrend or a pullback from an upswing to a more significant downtrend. Ideally, both candles are of decent size relative to the price bars around them. Two very small bars may create an engulfing pattern, but it is far less significant than if both candles are large, showing more volatility.