How to identify

1.   An uptrend is under way 2.   A long white day occurs 3.   The second day is a black day that completely engulfs the real body of the first day

With the Engulfing bear pattern an uptrend is in place when a small white body day occurs with not much volume. The next day, prices open at new highs and then quickly sell off. The sell-off is sustained by high volume and finally closes below the open of the previous day. Emotionally, the uptrend has been damaged. If the next (third) day's prices remain lower, a major reversal of the uptrend has occurred. Confirmation of the trend reversal would be with a black candlestick, a large gap down or by a lower close on the next trading day would confirm the trend reversal.

The Engulfing bear pattern is also the first two days of the Three Outside Down bear pattern. Because of this, the Engulfing bear pattern is not considered as reliable as the Three Outside Down bear pattern.

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