Bullish Engulfing

Bullish Engulfing for NT8

The Bullish Engulfing pattern is a two bar reversal pattern where the first bar is an down-close or a doji bar. The second bar is a large body up-close, closing above the body high of the prior candle. The candle wicks are not considered for this pattern.

What is a Bullish Engulfing Pattern

As the name implies, the first candle’s body is engulfed by the second. However, the pattern should not be interpreted simply as bearish price action followed by bullish rejection. In order for the Bullish Engulfing pattern to form, the price must open at or below the close of the prior bar. Otherwise, the bullish candle would not meet the “engulfing” requirement.

To determine the large body requirement, a minimum threshold has to be met. This is done by making a comparison to the average bar size found in the reference period. The minimum large body threshold, as well as the reference period used to establish the average, are adjustable.

When identified as a reversal, the Bullish Engulfing pattern will occur during a minor bearish swing trend. The trend bias specifications are user selectable via the indicator dialogue box, as per the deviation type and multiplier settings. The bearish equivalent to this pattern is the Bearish Engulfing.

As with other reversal setups, the statistical probability of Bullish Engulfing patterns may improve when combined with trend analysis or momentum oscillators. More information on combining other technical indicators with candlestick patterns in this post.

Other bullish candlestick patterns

Other bullish candlestick patterns include the bullish belthold, bullish harami, bullish harami cross, white marubozu, bullish piercing, bullish hammer, dragonfly doji, inverted hammer, morning star, morning doji star, long white candle, tweezers bottom, three white soldiers and the rising three methods.

TheBullish Engulfing pattern and all of the above patterns may be identified with our candlestick pattern indicator for NinjaTrader 8. Check out the LizardIndicators Premium Section for more information.