Bullish and Bearish Engulfing

Bullish engulfing: first candle is bearish (or small), second is a larger bullish candle whose body completely covers the first's body. It shows buyers overwhelmed sellers within two periods. Bearish engulfing is the inverse at highs.

Location is everything. Engulfing at HTF support after a downtrend is a classic manual long signal. Engulfing at resistance after a rally supports shorts. Mid-range engulfing is often a trap before the next range whipsaw.

The engulfing body should be meaningful — not a 1-tick engulf of a doji. Look for clear size disparity and preferably a close near the engulfing candle's extreme in the direction of the trade.

Stops typically go beyond the engulfing candle's wick low (longs) or wick high (shorts). Targets aim at the next structure level or opposing liquidity pool.

Failed engulfing teaches discipline: if price immediately closes back through the engulfing body, the shift failed — exit or tighten stops without narrative.