Bearish Engulfing Pattern: How to Spot It and Trade It

The bearish engulfing pattern is the exact mirror of the bullish version, and it shows up in the opposite place: at the top of an uptrend, rather than the bottom of a downtrend.

What it looks like

• A green candle, continuing an uptrend.
• Followed immediately by a red candle whose body fully covers the green candle's body — the red candle's open is at or above the green candle's close, and its close is at or below the green candle's open.

Buyers were in control on candle one. On candle two, sellers didn't just pause the advance — they erased it entirely within a single session, and then some.

Same rule as the bullish version: size matters

A red candle that only partially covers the prior green candle's body is a weaker signal than one that fully engulfs it. The bigger the red candle relative to what it's swallowing, the more decisively sellers have taken control.

Where it means the most

• After an extended uptrend, especially one that's been running for a while — this is where a bearish engulfing pattern carries the most weight.
• At a level that already mattered, like a prior high or a round-number resistance zone.
• On rising volume for the red candle — a real shift in control tends to come with participation behind it, not a quiet drift.

The trap to watch for

Because this pattern often shows up after a strong run, it's tempting to treat every red candle after a rally as a bearish engulfing signal. Check the actual math: the red body has to fully cover the green body before it, not just look large next to it. A near-miss is not the same pattern, and it doesn't carry the same meaning.