Bearish Engulfing Pattern: Spot Trend Reversals Like A Pro

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What Is It

Two-candle reversal signal where a large red candle completely engulfs the previous small green candle, indicating sellers overpowering buyers

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Pattern Structure

Day 1 shows a small bullish candle. Day 2 opens higher but closes sharply lower, fully swallowing the first candle's body

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How to Trade

Enter short at second candle's close or third candle's open. Place stop-loss just above the pattern's highest point

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Confirm Before Acting

Wait for the third candle to close below the second candle. High volume plus RSI divergence strengthens the reversal signal significantly

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Key Takeaway

Strongest resistance levels after prolonged uptrend. Beware of false signals in choppy markets, always validate with supporting indicators

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Bearish Engulfing Pattern: Spot Trend Reversals Like A Pro

What Is ItTwo-candle reversal signal where a large red candle completely engulfs the previous small green candle, indicating sellers overpowering buyers

Pattern StructureDay 1 shows a small bullish candle. Day 2 opens higher but closes sharply lower, fully swallowing the first candle's body

How to TradeEnter short at second candle's close or third candle's open. Place stop-loss just above the pattern's highest point

Confirm Before Acting Wait for the third candle to close below the second candle. High volume plus RSI divergence strengthens the reversal signal significantly

Key TakeawayStrongest resistance levels after prolonged uptrend. Beware of false signals in choppy markets, always validate with supporting indicators