1. The Bullish Engulfing Pattern occurs at the bottom of a downtrend & signals a powerful reversal to the upside.
A small red bearish candle is followed by a massive green bullish candle that completely covers the body of the previous day. It is a Buy signal.
NVIDIA in Oct 25. After a brief dip NVDA formed a Bullish Engulfing Candle. The green candle was so large that it looked like it ate the previous 3 days for breakfast. That was the signal for the rally that has pushed NVDA up over 3% on Jan 2.
The opposite is the Bearish Engulfing Pattern. This appears at the peak of an uptrend and warns that the party is over.
A small green bullish candle is followed by a much larger red bearish candle that completely engulfs the previous day's gains.
BABA on Nov 14, a giant red candle engulfed the previous day's green candle. It dropped 12% the following week.
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