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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski’s Bearish Engulfing

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Industrials (^DJI):
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As of 05/25/2016
17,852 145.46 0.8%
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648 -2.63 -0.4%
4,895 33.83 0.7%
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Tom's Targets    Overview: 05/12/2016
18,400 or 17,300 by 06/01/2016
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625 or 665 by 06/01/2016
5,050 or 4,750 by 06/15/2016
2,120 or 2,020 by 06/01/2016

Written by and copyright © 2005-2016 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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The bearish engulfing candlestick is one of the more popular and well known candlesticks. It works very well as a bearish reversal, performing that way 79% of the time (ranking 5 out of 103 candlestick types where 1 is best). Unfortunately, the trend after the breakout is short-lived, ranking 91st. Thus, even though price will often reverse, the bearish engulfing candlestick does not imply a lasting reversal.

Important Results for Bearish Engulfing

Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 79% of the time
Frequency rank: 11
Overall performance rank: 91
Best percentage meeting price target: 76% (bear market, down breakout)
Best average move in 10 days: -5.92% (bear market, down breakout)
Best 10-day performance rank: 21 (bear market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal bearish engulfing candlestick
Bearish Engulfing
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Bearish Engulfing Discussion

The bearish engulfing candlestick performs best after a downward breakout, but really sucks after an upward one. Compare the ranks of 103 and 100 for upward breakouts in a bull/bear market, respectively, with 25 and 21 for downward breakouts.

The bullish engulfing candlestick is just like it sounds. In an upward price trend, look for a white candle followed by a black candle the body of which overlaps the body of the white candle. By overlaps, I mean the body of the black candle has an open above the prior close and a close below the prior open. The black body is taller than the white body, and everything appears in an upward price trend. Still confused? Just look at a picture of the ideal bearish engulfing candlestick above.

Bearish Engulfing Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwo.
Price trend leading to the patternUpward.
ConfigurationLook for a two candle pattern in an upward price trend. The first candle is white and the second is black. The body of the black candle is taller and overlaps the candle of the white body. Shadows are unimportant.
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Three Trading Tidbits for Bearish Engulfing

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Bearish engulfing candles that appear within a third of the yearly low perform best -- page 311.
  2. Select tall candles -- page 311.
  3. Trade upward retracements in a downward price trend -- page 313.

Bearish Engulfing Example

The bearish engulfing candlestick on the daily scale

The bearish engulfing candlestick appears a A, circled in red, on the daily price chart. In an upward price trend, look for a white candle followed by a black candle. The body of the black candle should engulf or overlap the white candle’s body, as shown here. Shadow overlap is not important.

This bearish engulfing candlestick breaks out downward when price closes below the bottom of the candlestick pattern first. Thus, the bearish engulfing candlestick serves as a bearish reversal in this example and in 79% of the other 20,000 that I studied.

Two additional bearish engulfing candlesticks appear at B and C. Candle B acts as another bearish reversal, but C acts as a continuation of the uptrend.

-- Thomas Bulkowski

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See Also

Written by and copyright © 2005-2016 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. So many cats, so few recipes.