Bearish Engulfing
A two-candle formation in which a falling candle's body completely covers the preceding rising candle's body.
How it is identified
Test: previous Close > previous Open; current Open >= previous Close and current Close <= previous Open
Unit
qualitative
In depth
The mirror of the bullish engulfing, encoding a period that opened above the prior close and closed below the prior open — a full reversal of the previous period's body. Because the definition is precise, it is one of the few candlestick formations that can be backtested without judgement calls, and such tests generally find modest and cost-sensitive effects. Frequency matters when interpreting: a liquid stock prints dozens of these a year, so treating each as significant guarantees overtrading. The entry defines the shape and offers no forecast.
Worked example
Day one opens ₹512 and closes ₹528. Day two opens ₹530 and closes ₹508. The second body spans ₹508 to ₹530, covering the first body's ₹512 to ₹528 entirely.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Bearish Engulfing” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.