Types of Engulfing Patterns

We can distinguish two primary types of engulfing patterns, each with its own set of subcategories or subtypes.

Types of Engulfing Patterns

The shape of an engulfing pattern consists of two contrasting candlesticks where the second one is larger and completely envelops or "engulfs" the first one.

We can distinguish two primary types of engulfing patterns, each with its own set of subcategories or subtypes:

  1. Standard Engulfing Pattern
    • Bullish Engulfing Pattern
    • Bearish Engulfing Pattern
  2. Last Engulfing Pattern
    • Last Engulfing Bottom
    • Last Engulfing Top

1. Standard Engulfing Pattern

The standard engulfing pattern (or just "Engulfing Pattern") is the most widely recognized and frequently used type among traders.

According to the context of the market and the direction of the signal, bullish or bearish, we can identify two types of engulfing patterns:

  • Bullish Engulfing Pattern
  • Bearish Engulfing Pattern

Bullish Engulfing Pattern

A bullish engulfing pattern is a two-candlestick formation that appears during a downtrend. The first candle is usually a small bearish (red or black) candle, followed by a larger bullish (green or white) candle. The body of the second candle completely "engulfs" the body of the first, indicating a potential reversal to the upside.

Shape and Context of a Bullish Engulfing Pattern
Shape and Context of a Bullish Engulfing Pattern

The pattern suggests that bulls have gained control over bears, and it is often considered a strong buy signal when confirmed with other indicators.

Bearish Engulfing Pattern

A bearish engulfing pattern is a two-candlestick combination that appears during an uptrend. The first session is typically a small bullish (green or white) candle, followed by a larger bearish (red or black) candle. The body of the second candle completely "engulfs" the body of the first, indicating a potential reversal to the downside.

Shape and Context of a Bearish Engulfing Pattern
Shape and Context of a Bearish Engulfing Pattern

The pattern indicates that the bears have taken control from the bulls and is frequently viewed as a robust sell signal when corroborated by other indicators.

2. Last Engulfing Pattern

We can differentiate two types of last engulfing patterns:

  • Last Engulfing Bottom
  • Last Engulfing Top

Last Engulfing Bottom

The candle combination of a last engulfing bottom is the same as the bearish engulfing pattern. So, what's the difference? While the bearish engulfing pattern appears after an uptrend, the last engulfing pattern should emerge after a downtrend.

Shape and Context of a Last Engulfing Bottom
Shape and Context of a Last Engulfing Bottom

Last Engulfing Top

The last engulfing top has the shape of a bullish engulfing pattern; however, the last engulfing top always emerges after an uptrend.

Shape and Context of a Last Engulfing Top
Shape and Context of a Last Engulfing Top