Bearish Engulfing Pattern on a Live Gold Chart

What it shows

Each one gets a red label marked BE over the high of the second candle.

How Pravex works it out

1. Long and small are relative for the bearish engulfing: the code keeps an exponential average of the last 14 bodies (open to close) and compares each body with it, so with fewer than 14 candles nothing qualifies.
2. The first candle must be rising (close above open) and small, with a body below the average.
3. The second candle must be falling, open at or above the first candle’s close and close at or below the first candle’s open, with a body bigger than the first. Only the bodies are compared.
4. The uptrend the bearish engulfing needs is read from the first of the two candles: by default its close must sit above the 50-candle simple average, and the trend setting can make the bearish engulfing test stricter or switch it off.
5. Example numbers, not a live price: the first candle opens at 2,020 and closes at 2,023. The second opens at 2,023 and closes at 2,017. Its body of 6 runs from 2,023 down past 2,020, so it engulfs the first body of 3.

Settings

Setting	Default	What changing it does
Trend check	SMA50	Decides what counts as an uptrend before the bearish engulfing. By default one close is read against the 50-candle average; adding the 200-candle average asks for a longer trend before the bearish engulfing, and switching the check off ignores the trend completely.
Label colour	Red (#F23645)	Change it to tell the bearish engulfing apart from other patterns on the same chart. It fills the BE label over the high of the last candle; the text stays white.

How traders read it

The first candle shows buyers still in front but with a small body, which means less push than before. Then the second candle opens around their close and finishes below their open. That is the sellers taking control within one candle.

If you trade it, the high of the two candles is the level that proves it wrong. A second body several times the first is a stronger case than one that only just covers it. On gold, an engulfing candle that comes from one news release can be undone just as fast, so the next candle or two matter.

When it misleads

One close above the 50-candle average is enough for our uptrend test, so a bounce in a falling market can qualify and the pattern then just continues the fall. The second candle only has to be bigger than a small first one, which is easy after quiet hours. In a steady uptrend, bearish engulfing candles often mark a pause and not a top. On the newest candle the bearish engulfing check reruns with every price change, so a label there can come and go until the candle closes.

Questions and answers

What is a bearish engulfing pattern?

Two candles after a rise: a small rising candle, then a falling candle whose body opens at or above the first close and closes at or below the first open.

Is a bearish engulfing a sell signal?

It is a warning that buyers have lost control for now. The usual next step is to wait for the next candle to close lower, with a stop above the pattern’s high.

Does the second candle need to be long?

In Pravex it only needs a body bigger than the first candle’s, and the first must be small (below the 14-candle average body).

What does a bullish engulfing look like next to it?

The bullish engulfing: after a fall, a rising candle whose body covers the small falling candle before it.

Related: Engulfing - Bullish, Dark Cloud Cover - Bearish, Harami - Bearish, All Candlestick Patterns, every indicator.