June 26, 2010

Bearish Engulfing Candlestick pattern

BEARISH ENGULFING

Pattern explanation:
The Bearish Engulfing Candlestick pattern occurs at the end of an uptrend so it is know as a Bearish reversal pattern, This pattern is a combination of two candles. The first candle is a small bullish candle and the second candle is a large Bearish candle.

Pattern Psychology:
As the trend before the formation of a bearish engulfing is uptrend the buyers gets excited on seeing the bullish candle and the next day they give a gap up, but the price starts to fall and finally closes below the opening of the previous day. This clearly shows that the bears are stronger than bulls.

And one important thing in any candlestick pattern analysis is to consider the price action before a pattern formation and the price action after the pattern formation. Most of the candlestick pattern needs price confirmation before entering a trade.
BEARISH ENGULFING IN S&P 500




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