What is Bullish Engulfing Pattern?
Let us now understand the bullish Engulfing Pattern in depth. A trader always searches for a perfect pattern to enter into a trade. One such pattern is a bullish engulfing pattern. More often, the bullish engulfing pattern showcases the end of downtrends and the start of upward trends. When a new candle starts at a price lower than the previous day’s closing price, a bullish engulfing candle can be seen. This can point to a probable downward trend.
However, when buying pressure picks up, the market’s mood changes, and a fresh green candle forms. The red candle from the previous day is entirely engulfed by the green candle, notifying a rise in the stock price and buying. This indicates the start of an upward trend.
Understanding Bullish Engulfing Pattern
The pattern consists of two candles that signal a potential up move in the stock’s price. Majorly, this pattern is in a downtrend, but it can be seen in an uptrend too. The patterns forms with a small red candle that is completely engulfed by the next green candle. The significance of the pattern is that it signals that buyers have taken over the market after the continuous selling in the downtrend. Many conventional traders see this pattern as a potential buying opportunity and take long positions.
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