Pattern Detail

Bearish Engulfing

Two-candle bearish reversal: an up candle swallowed by a larger down candle whose body engulfs the prior one.

A real Bearish Engulfing on NQ daily bars, Jun 1, 2011. Price then followed through 2.9% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.
A real Bearish Engulfing on NQ daily bars, Jun 1, 2011. Price then followed through 2.9% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.
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How to read this

Everything here is in R, the setup's own risk. 1R is the distance from the entry (the pattern's closing price) to where it would be proven wrong — its highest high over the 2 bars that form it. So "offered 2R" means price ran twice that distance in your favor at some point before the stop. It does not assume you took profit there: a target is a strategy choice.

Room offered (≥ 1R)

47.2%

Reliable

Offered at least 1× its risk before the stop, vs 40.4% for a random short entry (+6.8 pts).

Move size vs normal

1.03×

Realized range over the next 20 bars vs a random bar. About normal.

Typical room (20-bar)

1.21R

Average run in favor (capped at 3R), vs 1.05R for a random short entry.

Summary

Offered at least 1R of room 47.2% of the time vs 40.4% for a random short entry — a 6.8-point gap, wider than the ±0.7-point margin of error from chance, and it holds across the sample. A real, if modest, tendency to offer more room than the market alone.

Room offered, this setup vs a random short entry

Outcome This setup Random entry Edge
Offered ≥ 1R 47.2% 40.4% +6.8
Offered ≥ 2R 28.5% 27.4% +1.1
Offered ≥ 3R 18.5% 19.8% -1.3
Stopped < 1R 50.6% 58.1% -7.4
Went sideways 2.2% 1.5% +0.7

21,593 occurrences · 1,146,594 random-entry controls · 20-bar horizon

A bearish engulfing is the bullish engulfing flipped. An up candle is followed by a larger down candle whose body completely covers the body of the one before it. The read is a fast handoff from buyers to sellers: whatever ground the up candle gained, the next candle takes back and then some.

Steve Nison ranks the engulfing pattern among the major reversal signals in Japanese Candlestick Charting Techniques (1991), the work that brought candlestick analysis to Western markets.

How to spot it

  • The market is rising into the pattern.
  • The first candle is an up (green) candle that fits the advance.
  • The second candle opens at or above the first candle’s close, then closes below the first candle’s open. Its body swallows the prior body.
  • The larger the second candle relative to the first, the stronger the signal traders read into it.

The dashed box on the chart above marks the two candles on a real occurrence, with the advance before and the move after.

The psychology

Price has been rising, and as the first candle closes the buyers are still in control and comfortable. The next candle opens higher, right where they want it, and then everything turns. Instead of carrying on up, price reverses and closes below where the entire prior candle began. In a single bar the buyers’ last push has been met and erased.

That is the story traders read into it: the people lifting the market have run out of demand, and sellers have stepped in with enough size to take back a full candle of buying and then some. Anyone who bought near the highs is now offside, and some of them will have to sell to get out, which adds fuel to the turn. The larger the engulfing candle, the more decisive that handover of control looks, and the more attention it draws.

Whether that shift in mood actually leads anywhere is a separate question, and it is the one the data below answers.

Does it actually work?

A pattern is a setup, not a trade, so the honest question is not “did it win” but “how much room did it tend to offer before it was proven wrong.” The tabs below answer that across five futures markets (Nasdaq, S&P 500, gold, crude oil, natural gas) and seven timeframes from one minute to one day.

For each occurrence we measure the room the move offered in units of the pattern’s own risk, then set it against what a random entry on the same market would have done. When the pattern offers more room more often than chance, that shows up as a real edge. When it does not, the page says so plainly.

Read it with the sample size in view. On the faster timeframes a pattern can fire thousands of times, enough to trust. On the daily chart it is far rarer, so treat those numbers as a hint rather than a verdict. Thin samples are flagged for you on the page.

How we measured it

  • Entry is the close of the final candle of the pattern.
  • One unit of risk, 1R, is the distance from that close up to the pattern’s invalidation point: the highest high of the two candles that form it. If price trades through there, the setup is wrong.
  • We then follow the next 20 bars and record how far price ran in your favor, in multiples of that risk, before the stop was hit.
  • Every figure is set against a random entry on the same market and timeframe, so the market’s own drift is accounted for.
  • No profit target and no position sizing. Where you take profit is a strategy choice; this measures only the room the pattern tends to give.

What this page does not cover

  • Volume on the pattern’s candles.
  • Whether the pattern forms at a meaningful resistance level.
  • Pairing it with a trend filter or a confirming signal.
  • A profit target or position sizing. We use the pattern’s own invalidation point as the stop to define risk, but where you take profit, and how much you put on, are strategy decisions this page leaves to you.

Sample Bearish Engulfing Firings (20)

Based on data through Apr 29, 2026

Time Risk (pts) Room offered Result
Apr 29, 2026, 1:00 PM CDT 54 0.83R Stopped
Apr 29, 2026, 11:10 AM CDT 26.5 3.00R Ran ≥1R
Apr 29, 2026, 9:45 AM CDT 23.75 3.00R Ran ≥1R
Apr 29, 2026, 5:30 AM CDT 10.5 3.00R Ran ≥1R
Apr 28, 2026, 1:00 PM CDT 18.5 0.47R Stopped
Apr 28, 2026, 11:25 AM CDT 18 2.36R Ran ≥1R
Apr 28, 2026, 8:50 AM CDT 65 2.68R Ran ≥1R
Apr 28, 2026, 8:30 AM CDT 40.25 0.00R Stopped
Apr 28, 2026, 8:05 AM CDT 33.75 0.55R Stopped
Apr 27, 2026, 11:45 PM CDT 7 3.00R Ran ≥1R
Apr 27, 2026, 5:45 PM CDT 11 1.14R Ran ≥1R
Apr 27, 2026, 12:50 PM CDT 15.75 2.13R Ran ≥1R
Apr 27, 2026, 12:15 PM CDT 25.75 0.00R Stopped
Apr 27, 2026, 11:50 AM CDT 14.25 0.91R Stopped
Apr 27, 2026, 12:55 AM CDT 10.25 3.00R Ran ≥1R
Apr 24, 2026, 12:05 PM CDT 14.5 2.88R Ran ≥1R
Apr 24, 2026, 11:00 AM CDT 9.25 0.00R Stopped
Apr 24, 2026, 10:35 AM CDT 30.5 0.00R Stopped
Apr 24, 2026, 8:20 AM CDT 24.75 3.00R Ran ≥1R
Apr 24, 2026, 4:50 AM CDT 17 0.26R Stopped

Sample backtest

Real backtested runs of this pattern, with commissions and slippage. Open one for the full equity curve and metrics, or backtest it yourself on your own contract and dates.

Backtest this pattern

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