| Bearish Candlestick Patterns |  | | |
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This Pattern signals a :
Reversal
Reliability of this pattern:
High
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This Pattern signals a : Reveral
Reliability of this candlestick pattern: Moderate
How to Identify:
Two candles are involved in forming this pattern. On a daily chart, here's how it will unravel:- 1st day is a bulls day (white candle) with a smaller body
- 2nd day is bears day - the candle engulfs the 1st day - it doesn't have to engulf the shadows of the first day - just the body.
In the best setup - the shadows are also engulfed as in the above image.
Market Psychology:
This pattern usually occurs at the end of a bullish rally - indicating that the bulls have lost momentum and the bears take control of the market by engulfing the body of the 1st day (Kinda like I see your small body and raise my big body to overpower you).
Unneccessary note: This reminds me of our two parakeets - the bigger bird when trying to express that he is the boss - always stands right beside the smaller one and raises it neck high & tall to show who is in power - I can easily imagine my bigger parakeet to be the bearish candle.
The opposite of Bearish Engulfing Pattern is Bullish Engulfing Pattern
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