Bearish Engulfing

Appearance: Black (red) body of a candle engulfs the whole white (green) body of the previous candle.

Criteria: The market has to be in a definable up-trend even if the trend is short term. The body of the second candle must engulf the whole of the previous white (green) body but need not engulf the shadow. If the previous candle is a doji or of very small body, then it need not be white (green).

Effect: The bears appear to be taking over from the bulls and a downtrend may be expected.

Note: In candlestick descriptions, "white (green)" refers to an up-bar, and "black (red)" refers to a down-bar. Individual traders prefer different bar colors. For example, we personally trade with candles set to green for up and red for down. (TradeStation defaults their Candlesticks to this color convention.) Most related textbooks use white (or green, if color is used) for up and black (or red) for down.