Reversal◐ Heuristic
◆ The PatternThe second candle swallows the first — momentum shift
An Engulfing pattern is a two-candle reversal. Bullish: small red candle followed by a larger green candle that completely covers the red body. Bearish: small green followed by a larger red that engulfs it.
Second body completely covers (engulfs) the first body
The engulfing candle shows conviction — the larger the second candle relative to the first, the stronger the signal.
// Bullish and Bearish Engulfing
Key insight: Engulfing patterns at key support/resistance levels are far more significant than those in the middle of a range.
Pattern bridge: One candle completely contains the prior — a variance expansion in a single bar.