Definition
Bearish Engulfing forms when a large bearish candle completely engulfs the previous bullish candle's body. It signals that sellers have overwhelmed buyers. More significant at the top of uptrends and on high volume.
Formula
Bearish candle open > previous close; Bearish candle close < previous open
Example
Day 1: Open $48, close $50 (bullish). Day 2: Open $51, close $46 (bearish engulfing). The large red candle swallowing the green signals reversal.
FAQ
What is Bearish Engulfing Pattern?
A two-candle bearish reversal where the second candle completely engulfs the first.
How do you calculate Bearish Engulfing Pattern?
A common formula for Bearish Engulfing Pattern is: Bearish candle open > previous close; Bearish candle close < previous open
Why is Bearish Engulfing Pattern important?
Bearish Engulfing Pattern helps investors evaluate candlestick patterns and make more informed decisions.