Bearish Engulfing

See our Patterns Dictionary for other patterns.

Check our CandleScanner software and start trading candlestick patterns!

Figure 1. Bearish Engulfing pattern.

Figure 1. Bearish Engulfing pattern.

Japanese name: tsutsumi
Forecast: bearish reversal
Trend prior to the pattern: uptrend
Opposite pattern: Bullish Engulfing
Extended pattern: Three Outside Down
See also: Last Engulfing Bottom

Construction:

  • First candle
    • a candle in an uptrend
    • white body
  • Second candle
    • black body
    • candle's body engulfs the prior (white) candle's body

 


This article is devoted to the Bearish Engulfing two-line pattern.

The Japanese name of the Bearish Engulfing pattern is tsutsumi, what stands for the Japanese art of packaging and derives from the verb whose meaning is to envelop (a present). In English, we use the word engulfing because the second line engulfs (overlaps) the first line of the pattern.

The Bearish Engulfing is a two-line pattern which the white candle's body of the first line is engulfed by the black candle's body of the second line. The first line can be any white basic candle, appearing both as a long or a short line. It can be even a doji candle, except the Four-Price Doji. The second line is any black candle appearing as a long line: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu.

The shadows do not matter what is explained in the following article: Two-Line Patterns.

Pattern appears in an uptrend and forecasts its reversal. If the trading volume grows on the second line, the pattern reliability is higher. The Bearish Engulfing pattern needs confirmation on the subsequent candles.

Morris created the Three Outside Down pattern as a confirmation of the Bearish Engulfing. In general every pattern is recommended to be confirmed. Confirmation can be in the form of breaking the nearest support zone or a trendline.

It is crucial where on the chart a Bearish Engulfing appears. Depending on the market context, the candle pattern may be only a short break before further market increases. Especially if below a Bearish Engulfing a strong support area exists.

If a Bearish Engulfing pattern is confirmed, its second line may form a resistance zone.

 

Figure 2.

Figure 2. The occurrence of a Bearish Engulfing being an example of how the market context is critical. Before the appearance of a Bearish Engulfing pattern, we can see a Turn Down occurrence forming a very strong resistance zone. Although it was created two months prior the Bearish Engulfing, it stopped the market increase. Short Black Candle, which closing price is below the trendline and appearing after the pattern occurrence, confirms its bearish forecast.

 

Figure 3.

Figure 3. The figure presents how the Long White Candle, formed at a high trading volume, makes a very strong support zone. Appearance of the Bearish Engulfing has to be confirmed what is not that easy. First, the trendline has to be broken. Second, the Long White Candle has to be entirely covered, to cancel the support zone. As we can see, the Bearish Engulfing patterns was not confirmed, after all.

 

Bearish Engulfing statistics

Below you can find some Bearish Engulfing pattern statistics calculated by CandleScanner software. To see more detailed statistics, for other markets and periodicity try our CandleScanner software. Prices start at only $10, and you can see more detailed statistics, for other markets and periodicity. Click here to find out more!

Pattern name: Bearish Engulfing
Scanner settings: daily stocks
Group: S&P500
Number of symbols: 502
Date range: 7/1/1995 - 6/30/2015
Time interval: daily candles
Total number of candlesticks: 2,236,421
Number of occurrences (Bearish Engulfing): 34,392
Number of occurrences (all candlestick patterns): 638,570
% of occurrences (Bearish Engulfing): 5.39 %
Average frequency: 65.0
Efficiency statistics (5 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
27 6,150 11,405 6,776 10,034
% of
Occurrences
0.08 % 17.80 % 33.16 % 19.70 % 29.26 %

 

Efficiency statistics (10 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
72 5,759 9,438 6,153 12,970
% of
Occurrences
0.21 % 16.54 % 27.44 % 17.89 % 37.92 %

 

10 top best performing symbols

Occurrences Statistics 5 candlesticks testing period
(HIGH efficiency)
10 candlesticks testing period
(HIGH efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
HAL 94 53.6 51 54.25 % 57 60.64 %
CVC 77 65.4 38 49.35 % 44 57.15 %
IPG 79 63.7 34 43.04 % 44 56.96 %
BHI 89 56.6 44 49.44 % 50 56.18 %
AMAT 82 61.4 43 52.44 % 44 53.66 %
CERN 83 60.7 41 49.40 % 44 53.01 %
RIG 107 47.0 50 46.73 % 56 52.34 %
DVN 92 54.7 35 38.04 % 48 52.17 %
URBN 96 52.4 45 46.87 % 50 52.08 %
FCX 81 62.1 37 45.68 % 42 51.86 %

 

10 top worst performing symbols

Occurrences Statistics 5 candlesticks testing period
(FALSE efficiency)
10 candlesticks testing period
(FALSE efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
SWKS 78 64.5 29 37.18 % 29 37.18 %
MNST 76 57.6 28 36.84 % 28 36.84 %
TSO 91 55.3 32 35.16 % 32 35.16 %
GMCR 80 62.3 24 30.00 % 24 30.00 %
BIIB 76 66.2 21 27.63 % 21 27.63 %
CTSH 80 53.6 22 27.50 % 22 27.50 %
COG 95 53.0 27 28.42 % 26 27.37 %
OKE 83 60.7 22 26.51 % 22 26.51 %
CSCO 83 60.7 21 25.30 % 21 25.30 %
PXD 76 66.2 19 25.00 % 19 25.00 %
Pattern name: Bearish Engulfing
Scanner settings: daily stocks
Group: S&P500
Number of symbols: 502
Date range: 7/1/2010 - 6/30/2015
Time interval: daily candles
Total number of candlesticks: 614,034
Number of occurrences (Bearish Engulfing): 8,786
Number of occurrences (all candlestick patterns): 166,328
% of occurrences (Bearish Engulfing): 5.28 %
Average frequency: 69.9
Efficiency statistics (5 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
27 1,357 3,615 1,870 1,917
% of
Occurrences
0.31 % 15.14 % 41.15 % 21.28 % 22.12 %

 

Efficiency statistics (10 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
72 1,212 2,952 1,834 2,716
% of
Occurrences
0.82 % 12.97 % 33.60 % 20.87 % 31.74 %

 

10 top best performing symbols

Occurrences Statistics 5 candlesticks testing period
(HIGH efficiency)
10 candlesticks testing period
(HIGH efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
RRC 21 59.9 10 47.61 % 15 71.43 %
BBY 19 66.2 11 57.90 % 13 68.43 %
GPS 19 66.2 7 36.84 % 12 63.16 %
URBN 19 66.2 10 52.63 % 12 63.15 %
AMZN 18 69.9 9 50.00 % 11 61.11 %
IPG 23 54.7 10 43.48 % 13 60.87 %
FSLR 20 62.9 12 60.00 % 12 60.00 %
GT 22 57.2 12 54.54 % 13 59.08 %
UA 29 43.4 14 48.28 % 17 58.63 %
AVGO 19 66.2 5 26.31 % 11 57.90 %

 

10 top worst performing symbols

Occurrences Statistics 5 candlesticks testing period
(FALSE efficiency)
10 candlesticks testing period
(FALSE efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
AET 20 62.9 7 35.00 % 7 35.00 %
DAL 20 62.9 7 35.00 % 7 35.00 %
APC 18 69.9 6 33.33 % 6 33.33 %
CI 21 59.9 8 33.34 % 7 28.57 %
GME 21 59.9 7 28.57 % 7 28.57 %
PWR 18 69.9 7 38.89 % 6 33.33 %
CNX 19 66.2 6 31.58 % 6 31.58 %
SWKS 19 66.2 6 31.58 % 6 31.58 %
AFL 20 62.9 6 30.00 % 6 30.00 %
MAS 20 62.9 6 30.00 % 6 30.00 %

Comments are closed.