Forex glossary
Engulfing Pattern
An engulfing pattern uses two opposite-direction candles, with the second body containing the first body. The bullish version is considered after a decline and the bearish version after an advance. Engulfing refers to bodies rather than necessarily the full wick ranges; reversal is not guaranteed.
Illustrative example
How does it work in practice?
Assume a bearish candle opens at 102 USD and closes at 100, followed by a bullish candle from 99.8 to 102.2. The second body engulfs the first without necessarily engulfing both candles' shadows.
A case to work through
Engulfing without an outside bar
Hypothetically, candle one has O=55, C=52 and H=58; candle two has O=51, C=56 and H=57.
- The second body, 51–56, contains the first body, 52–55.
- The second high of 57 does not contain the first high of 58, so full-range engulfing is absent.
What follows? Separate body engulfing from an outside-bar condition.
Example boundary: The preceding move and remaining shadows also matter to a full assessment.
A useful distinction
Engulfing Pattern / Harami
Engulfing has a larger second body containing the first; harami has a smaller second body within the first.
Check your understanding
Check body engulfing despite an unengulfed shadow.
Show the answer and explanation
No; 51–56 contains the 52–55 body
Shadows do not determine this criterion.
Bodies, shadows and context
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Read the fuller explanation
Related terms
Sources and documentation
- TA-Lib – ta_CDLENGULFING
Original OHLC body/shadow detection code and configurable candle thresholds; implementation is not effectiveness evidence.
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