What is a Bullish Engulfing Pattern?

A bullish engulfing pattern occurs in the candlestick chart of a security when a large white candlestick fully engulfs the smaller black candlestick from the period before. This pattern usually occurs during a down trend and is thought to signal the beginning of a bullish trend in the security.

How Does a Bullish Engulfing Pattern Work?

The bullish engulfing pattern can be illustrated in the following manner using candlestick charting:


In this example, the smaller black candlestick is overshadowed by the larger white candlestick. This indicates the stock opened the second period lower than the previous close and tried to fall lower during the trading period. However, investors began to buy the stock, pushing the price sharply higher at the close and indicating bullish sentiment has taken over.

Why Does a Bullish Engulfing Pattern Matter?

The bullish engulfing pattern indicates a potential reversal of investor sentiment and is suggestive of a stock having reached its minimum value over a given time period. Consequently, the stock may experience an upward, or bullish, movement in the near future.

Ask an Expert about Bullish Engulfing Pattern

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Bullish Engulfing Pattern.

Be the first to ask a question

If you have a question about Bullish Engulfing Pattern, then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

Verified Content You Can Trust
verified   Certified Expertsverified   5,000+ Research Pagesverified   5+ Million Users