Last Engulfing Bottom

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Figure 1. Last Engulfing Bottom pattern.

Forecast: bullish reversal/bearish continuation
Trend prior to the pattern: downtrend
Opposite pattern: Last Engulfing Top
See also: Bearish Engulfing

Construction:

• First candle
  • a candle in a downtrend
  • white body
• Second candle
  • black body
  • candle’s body engulfs the prior candle’s body

Definition of the Last Engulfing Bottom is exactly the same as of the Bearish Engulfing pattern except the trend requirement. The Bearish Engulfing appears within an uptrend while the Last Engulfing Bottom occurs within a downtrend.

It may be asked why such pattern may reverse a downtrend. Namely, there is a downtrend, but downward momentum somewhat slows down because a small white candle appears. However, the next candle has a long black body, which confirms the bear's strength. Overall most of us intuitively would say that we deal with a bearish continuation pattern.

The Last Engulfing Bottom is a good example to explain that a pattern occurrence is not equivalent to price prediction.

In the case of the Last Engulfing Bottom pattern, its name gives us some hint illustrating how it may work. The pattern should be preceded by a Bearish Engulfing pattern. Then we can expect downtrend reverse if a price is confirmed on the following candles.

If a Last Engulfing Bottom appears alone, that is, it is not preceded by a Bearish Engulfing pattern, a downtrend is likely to be continued. It may be especially true if the following candle closes below the pattern occurrence.

Prediction of trend reversal requires confirmation, i.e. the next candle shall be closed above the pattern.

If volume data is relevant to the analyzed market, it should be considered. If it increases for candles with white bodies, the probability of reversing a downtrend grows.

Figure 2. The chart presents situation that could be called "A Falling Window vs. four bullish reversal patterns".
The Falling Window pattern wins the battle, appearing at a very high trading volume, forming a strong resistance zone.
The Last Engulfing Bottom is a unique pattern because it may behave both, as a bullish reversal and bearish continuation. On the chart, it is visible that the second line of the Last Engulfing Bottom strengthened the mentioned resistance area. Failure of the subsequent bullish reversal patterns helped the bears to retain control.

Figure 3. The Last Engulfing Bottom is among the most intricate patterns because may act as a bearish continuation or a bullish reversal pattern. Confirmation of such pattern occurrence needs to be confirmed on the following candles.
The first occurrence of Last Engulfing Bottom is followed by a White Candle. The market managed to rise although a Falling Window formed a resistance area.
The second appearance of Last Engulfing Bottom resembles the previous one. Initially, the one could think that the pattern is confirmed to be a bullish pattern because a Thrusting appeared. Then however surprisingly a Turn Up pattern emerged which closed the Falling Window.

Last Engulfing Bottom statistics

Below you can find some Last Engulfing Bottom 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!