A bullish engulfing pattern is a two-candle reversal pattern in which a large green (bullish) candle completely engulfs the body of the preceding red (bearish) candle. It signals a potential shift in momentum from sellers to buyers, especially when it appears after a sustained downtrend or at a key support level. The pattern is stronger when the engulfing candle has above-average volume and when it occurs at a technically significant price zone such as a moving average or Fibonacci retracement level.
Example
“A bullish engulfing pattern formed at the 200-day moving average with twice the normal volume, prompting traders to enter long positions.”