Bullish Engulfing Pattern on a Live Gold Chart

What it shows

Each one gets a blue label marked BE under the low of the second candle.

How Pravex works it out

1. For the bullish engulfing, a body is the distance between open and close, and long or small is judged against a 14-candle exponential average of those bodies: above it is long, below it is small. The first 13 candles have no average yet, so no bullish engulfing is found there.
2. The first candle must be falling (close below open) and small, with a body below the average.
3. The second candle must be rising, open at or below the first candle’s close and close at or above the first candle’s open. Its body must also be bigger than the first body. Shadows are not compared, only bodies.
4. Before the bullish engulfing counts, the first of the two candles has to show a downtrend, which by default means a close below the 50-candle simple moving average.
5. Example numbers, not a live price: the first candle opens at 2,004 and closes at 2,001. The second opens at 2,001 and closes at 2,006. Its body of 5 covers 2,001 to 2,004 and is bigger than 3, so it engulfs.

Settings

Setting	Default	What changing it does
Trend check	SMA50	Decides what counts as a downtrend before the bullish engulfing. By default one close is read against the 50-candle average; adding the 200-candle average asks for a longer trend before the bullish engulfing, and switching the check off ignores the trend completely.
Label colour	Blue (#2196F3)	Change it to tell the bullish engulfing apart from other patterns on the same chart. It fills the BE label under the low of the last candle; the text stays white.

How traders read it

The pattern is a change of hands. The first candle shows sellers still in charge but running out of push, since its body is small. The second candle opens where they left off and closes above where they started, which is a clear show of buying.

The low of the two candles is the usual stop, and the size of the second body tells you how much risk that is. A second candle much bigger than the first is a stronger version. One that barely covers the first body is a weaker one, even though it passes the same rule.

On spot gold the second candle usually opens right at the first candle’s close, because the market trades almost around the clock. So the engulfing here is about the close, not a gap. Where it forms counts most: at a level that held before, or after a long fall, it carries more weight than in the middle of a range.

When it misleads

Our trend test looks at one close against the 50-candle average, so a short dip inside a rise can qualify. The second candle does not have to be long, only longer than a small first candle, so after a quiet stretch two modest candles can pass. A bullish engulfing that forms straight into a level where price fell before often stalls there. The candle still forming is checked again on every update, so a bullish engulfing label can show up on it and vanish before the close; only a bullish engulfing label on a closed candle stays.

Questions and answers

What is a bullish engulfing pattern?

Two candles after a fall: a small falling candle, then a rising candle whose body starts at or below the first close and ends at or above the first open.

Does the second candle have to engulf the shadows too?

Not in Pravex. Only the bodies are compared. A second candle that also covers the first candle’s shadows is a stronger version, but it gets the same label.

How do traders confirm a bullish engulfing?

A common check is the next candle holding above the middle of the engulfing body, or closing above its high. A close under the pattern’s low cancels it.

How do you spot the bearish engulfing, its mirror?

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

Related: Engulfing - Bearish, Piercing - Bullish, Harami - Bullish, All Candlestick Patterns, every indicator.