A candle whose body completely covers the previous day's body
An engulfing pattern forms when a candle's body, the range between open and close, covers the whole body of the previous day's candle. After a decline, a large up candle engulfing a down candle is known as a sign of strengthening buying; after a rise, a large down candle engulfing an up candle as a sign of strengthening selling. A single pattern does not settle the trend on its own, so it is read together with volume and the moves around it.
A down day that opens at $1,000 and closes at $980, followed by an up day that opens at $970 and closes at $1,020, forms an engulfing pattern.
For learning, not investment advice. Decisions are your own.
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