Things May Not Always Be As They Seem
It’s important to realize that while technical analysis patterns and charts can help you monitor the movement of a certain stock in the market, it won’t completely eliminate the chance that you could make a mistake and get stuck with a stock that is stagnating, or even losing value. However, the great thing about trends like the bullish engulfing pattern is that, when you spot them, it can indicate that your period of waiting and worrying doesn’t have to last forever. .
When defined by technical analysts, the bullish engulfing pattern is said to be one that starts with a smaller black candlestick and is then there follows a bigger white candlestick which engulfs or eclipses the prior day’s price point. In most cases, the wicks or shadows of the smaller black candlestick are short, enabling the body of the white candlestick to cover the entire range of the candlestick from the previous day. Keep in mind that white or hollow candlesticks always indicate an increase in price, while solid red or black candlesticks indicate a decline..
When looking for the bullish engulfing pattern in your stock charts, you need to be on the lookout for two candlesticks, one black and the second one white. In case you’re not aware, a solid black candlestick will always indicate losses on the day, while the white will indicate gains on the day, meaning the closing price was higher than the opening. There could be hours or even days between the two, but the white candlestick must always be large enough to completely cover the black one. When this is spotted and confirmed, you can be almost certain that a reversal of the precious trend will soon follow and things will be looking up.