BEARISH ENGULFING PATTERN

The bearish engulfing pattern is a strong bearish reversal candlestick pattern for intraday in an uptrend market near the resistance zone or supply zone. We can follow a bearish engulfing pattern like a shooting star candle.

             Since bearish engulfing is a two-candle pattern, the first candle should have a green body candle and the second candle should have a red body candle. The second candle with a red body candle should completely engulf(cover) the first candle with a green body candle.

You can see this in the below image

                                                               

How to work Bearish engulfing?

      It is very important to look for a bearish engulfing pattern at specific zones. In our strategy, our specific zone is a resistance zone. A resistance zone is a zone where the price makes a high and correction back downward from that high. You may also call it a correction wherein the price is in an uptrend; it pauses at a certain zone or it halts at a certain zone and moves downwards. The zone from which it made a high and correction back is called the resistance zone or the supply zone.

                                                                  

             In the above chart, the Market was in an uptrend & reached near resistance zone and in resistance zone, red candle formed after the green candle, formed a strong red candle, and engulfed the previous green candle. After a bearish engulfing pattern, you have to enter for a short position. You can see in the above chart

What should be the stop loss & target in the Bearish Engulfing pattern?

After the Bearish engulfing pattern, you have to enter for a short position.

A bearish engulfing pattern high should be your stoploss which is a very small stoploss with a high target of at least 1-2% of the Stock price or you can go to the support zone level.