What is the Bearish Engulfing Candlestick Pattern?

Last Updated: 2 Sep 2025

The bearish engulfing pattern is a technical analysis chart pattern, recognised as one of the clearest signs of a price cut action signal. It is represented by a green candlestick with a subsequent red candlestick that overshadows the green counterpart in size, practically eclipsing or engulfing it.

Bearish Engulfing is a sign that the buyers are not overpowered by the sellers in the market, and the patterns of trading behaviour are undergoing change. Named by the Japanese after a solar eclipse, the Bearish Engulfing Pattern may occur after a continued uprising in the market and may be an indication of the bullish market turning bearish.

A bearish engulfing pattern may occur anywhere, but it gains greater significance if it is at the peak of, or placed just after, a consistent upward rising trend, considering the candlesticks are both relatively larger than the other candlesticks surrounding them.

How to identify a Bearish Engulfing Candlestick Pattern?

Bearish engulfing meaning lies in its ability to signal a power shift from buyers to sellers. To qualify for this pattern, the opening price of the bearish candlestick must be equal to or greater than the closing price of the bullish candlestick.

The closing price of the bearish candlestick is lower than the opening price of the bullish candlestick from the previous day (or periods). Hence, the real body of the bearish candlestick must engulf the real body of the bullish candlestick. The greater the difference between the two, the more significant the market indication prompted by the Bearish Engulfing Pattern.

Example of Bearish Engulfing Candlestick Pattern

Suppose an IT firm’s stock has performed steadily over the past few weeks. But on Monday, the stock opens at ₹1,500 and closes at ₹1,530, which forms a small bullish candle. On Tuesday, the stock opens slightly higher at ₹1,540 but faces strong selling pressure throughout the day. It closes sharply lower at ₹1,470, which creates a large bearish candle that completely engulfs Monday’s smaller bullish candle body.

Importance of Bearish Engulfing Candlestick Pattern

A strong potential reversal from an uptrend to a downtrend is signalled by a bearish engulfing candle. It indicates increasing selling pressure as a large bearish candle engulfs smaller bullish ones. This effect helps traders to identify opportunities to sell or short a stock before prices decline.

Limitations of the Bearish Engulfing Candlestick Pattern

The bearish engulfing candlestick pattern is widely used to identify potential trend reversal. However, it has some limitations that you should consider for making a better choice:

• Fake Signals: It can sometimes give false trend reversal signals during sideways or choppy markets.
• Context Dependent: This practice is less effective in strong trends where momentum may continue despite the trend.
• Timeframe Sensitivity: Patterns on lower durations can be less reliable than those on daily or weekly charts.
• Market Conditions: During high volatility, the pattern may appear frequently without leading to sustained reversal. In such cases, traders may misinterpret it as a bearish reversal even when long-term momentum remains bullish.

How to trade using Bearish Engulfing Candlestick?

There is a certain element of fear or risk involved in following the Bearish Engulfing candlestick pattern. Since it is inherently a method of trading against the trend, it can be your friend, but market reversals do happen, and a Bearish pattern is an extremely useful indicator of a potential shift in market direction.

The simplest way to trade using a bearish candlestick pattern would be to identify this pattern after a consistent upward trend. This usually means an uptrend reversal, where buyers are getting weaker and sellers start to take control. 

For those who wish to hold back on risks even further, you can wait for a gap to open up after the bearish engulfing pattern is spotted. A downward gap occurs when the opening price for a trading day opens below the closing price for the previous trading day. In this case, after the day the bearish engulfing candlestick is observed. If you wish to further minimise your losses in the case of your prediction being incorrect, make sure you set a stop loss above the high wick of the second candle in the bearish engulfing candlestick pattern.

Conclusion

The Bearish Engulfing candlestick pattern can be a very useful tool in predicting market direction when paired with other technical analysis tools and succeeded by a confirming trend shift trading day. You can effectively incorporate this strategy using a share trading app. This pattern is easily recognisable as it usually occurs after a consistent uptrend and engulfs or eclipses the bullish candlestick from the previous day. 

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Frequently Asked Questions

1. What are the advantages and limitations of the Bearish Engulfing Candlestick?

The main advantages of the bearish engulfing candlestick include that it is simple to identify and interpret, and can be applied with other technical analysis tools and indicators. On the other hand, the limitations of this indicator include that the reversal in market trends is not guaranteed, and it may require confirmation of direction before price action is taken.

2. Is Bearish Engulfing a good strategy?

In singularity, the Bearing Engulfing Pattern has little to no meaning. It has to be viewed along with the market trend that it has followed. When viewed with market structures of support and resistance, the right Bearish Engulfing pattern can be considered a gold mine. In the right situations and with accurate measures such as the application of other technical analysis tools, Bearish Engulfing can be an extremely predictive, indicative and useful trading strategy.

What is a bearish engulfing candlestick pattern?

A bearish engulfing candlestick pattern is a two-candle formation, where a large red candle (bearish) fully engulfs the previous green candle (bullish). It is one of the key candlestick chart patterns used to identify potential reversals from an uptrend to a downtrend.

Can a Bearish Engulfing Pattern appear in any market?

A bearish engulfing pattern can occur in any market, including stocks, forex or commodities. However, it holds more significance when it appears after a strong uptrend.

What should I do after spotting a Bearish Engulfing Pattern?

Wait for confirmation from the next candlestick or technical insights before taking any action. This step helps to reduce the risk of acting on a false reversal signal.