Knowing how to spot crucial candlestick patterns can surely be a game-changer in improving your trading profitability. I will discuss one such crucial pattern today: the Bearish engulfing pattern. In this guide, I will explain you everything about the bearish engulfing pattern and how you can spot and use the pattern to place perfect trades on Binomo.
What does the Bearish engulfing pattern mean
A Bearish engulfing pattern is it trend reversal pattern used by traders to identify the potential trend reversal in the financial market, especially in the Forex and Binary Options. The appearance of the pattern signals an upcoming trend reversal from a bullish to a bearish trend where the first candle is a small bullish followed by a larger bearish candle.
How to identify the Bearish engulfing candlestick pattern
There is no particular time when this pattern will appear. You need to keep a keen eye to identify this pattern where
First candle: The first candle is a small candlestick it should appear after a series of long bullish trends.
Second candle: The second candle should open higher with the body above the previous candlestick close.
How to trade with Bearish engulfing candlestick pattern?
Before we can understand how to trade let’s first understand the meaning of the appearance of a bearish engulfing pattern.
First candlestick: The first candlestick represents the bullish force present in the market which was responsible for pushing the price higher.
Second candle: The second candle is important as it represents the possible end of the previous bullish force and the entry of a possible bearish force due to which a trend reversal is likely to take place.
Now, coming how you can trade with a bearish engulfing pattern. As I said above the appearance of a bearish engulfing pattern represents the possible entry of bearish force due to which a trend reversal is likely possible.
Therefore, with the appearance of a bearish engulfing pattern, we should watch the next two or three candles and if they are bearish we should place a sell trade.