Bullish Engulfing Pattern

Bullish engulfing refers to a type of candlestick pattern on traders' stock charts. Invented by Japanese rice traders 300 years ago, candlestick charts jam data for multiple time frames into kindergarten-approved crayon-color-coded “candlesticks.”

When a bullish engulfing pattern emerges, it suggests that an end to a stock’s decline is finally occurring. It can be found by looking at a small black candlestick that is “engulfed” by a large white candlestick, indicating that the price is going up. This means that there was intense buying interest that totally absorbed the range of the prior low and surpassed its high.