Mastering the Bearish Engulfing Candlestick Pattern
In this free Maverick Trading video, “Bearish Engulfing Pattern – Find & Identify” on YouTube, traders learn a crucial reversal tool.
The bearish engulfing candlestick pattern helps identify trend reversals, market sentiment shifts, and strong entry points when sellers gain control.
This strategy works for stocks, futures, forex, and cryptocurrencies across all timeframes and trading styles.
Maverick Trading shows how to recognize, validate, and trade this pattern with structure, discipline, and repeatable logic.
What Is a Bearish Engulfing Pattern?
A bearish engulfing pattern forms when a small bullish candle is followed by a larger bearish candle.
The bearish candle’s body completely engulfs the prior candle’s body, signaling strong selling pressure.
The second candle opens above the first candle’s close and closes below the first candle’s open.
This shows that sellers have overwhelmed buyers, shifting sentiment from bullish to bearish.
It’s a visual sign of potential trend reversal and a key warning for technical traders.
In the video, Maverick Trading explains that it’s not only about candle shapes.
Each candle represents market psychology, momentum, and trader sentiment.
You must interpret these patterns within broader context—trend, support and resistance, and overall market strength.
Understanding the story behind each candle helps traders anticipate future price action with greater confidence.
By mastering the bearish engulfing pattern, traders gain a powerful edge in spotting reversals early.
This structured approach promotes consistency, risk control, and smarter trade execution.
Watch Maverick Trading’s video to deepen your understanding of price action and market dynamics.
Why the Bearish Engulfing Pattern Matters
This pattern is highly valued among technical analysis tools for several reasons:
- Trend reversal potential: When it appears after a sustained up-trend, it can signal exhaustion of buyers and the emergence of sellers.
- Clarity in the chart: The visual “engulfing” action is easy to spot and can act as a sharp warning sign to traders.
- Defined trade mechanics: Because the pattern gives you an entry level (below the engulfing candle), a stop level (above the high), and a logical target zone (support or prior level), it lends itself to systematic trading.
- Psychological shift: It reflects how sentiment moved from buyer control to seller domination—something you can exploit when you understand what the chart is saying.
Maverick Trading emphasises all of the above in the video, showing that the pattern isn’t magic—it’s a signal when used in the right environment.
Components of a High-Probability Setup
In the video, the instructor breaks down the important contextual elements that drive the pattern’s reliability:
- Trend precedes the pattern: A bearish engulfing is far stronger when it appears at the end of a clear up-trend (higher highs, higher lows) rather than in a sideways or down-trend market.
- Location matters: Ideally, the pattern forms near a resistance area, near market structure, trendline, or swing high where sellers historically have control.
- Volume or momentum confirmation: The engulfing candle should ideally be accompanied by higher volume or a strong conviction close, showing sellers are stepping in with strength.
- Follow-through: After the engulfing candle prints, the next candle should continue in the same direction (downwards) to confirm that the momentum has shifted. Without follow-through, the pattern can fail or become a false signal.
How to Trade the Bearish Engulfing Pattern — Step-by-Step
Below is a practical trade plan drawn from the video and the pattern logic:
- Step 1: Identify an up-trend or corrective rally — Use trendlines, moving averages or higher highs/higher lows to confirm the market has been moving upward.
- Step 2: Spot the bearish engulfing candle — A large bearish candle that fully engulfs the prior bullish candle’s body.
- Step 3: Check for structural alignment — Is the pattern forming at or near a resistance zone, prior swing high, or trendline?
- Step 4: Wait for confirmation — Ideal confirmation is the next candle closing lower than the engulfing candle’s low or showing a strong move downward.
- Step 5: Define entry and stop-loss — Entry often triggered once price breaks below the low of the engulfing candle. Stop-loss above the high of the pattern or above the resistance zone.
- Step 6: Define target and risk-reward — Use prior support levels, pattern size, or measured move to set realistic targets. Ensure risk/reward is favourable (e.g., 1:2 or more).
- Step 7: Trade management — Once in trade, consider moving stop to break-even when price moves favourably, and possibly trail the stop if the trend accelerates.
Real-World Example from the Video
In the video, Maverick Trading uses real chart examples where an up-trend approaches a prior resistance zone, then prints a bullish candle followed by a large bearish candle that engulfs the prior one. The engulfing candle opens higher, closes lower than the prior open, showing sellers have taken over. The next candle opens lower or breaks below the pattern’s low, confirming the signal. Entry is triggered below the pattern, stop above, target set to prior support — all aligning with the standard rules.
This example illustrates how the pattern transforms from a visual alert into a tradable setup when combined with structure and confirmation.
Common Mistakes to Avoid
The video also warns about frequent errors traders make when applying the bearish engulfing pattern:
- Ignoring trend context — Using the pattern in a sideways or down-trend market reduces its reliability.
- Skipping confirmation — Entering immediately after the pattern without waiting for follow-through often leads to false signals.
- Weak pattern structure — Engulfing body too small, weak volume, poor location make the signal unreliable.
- Poor risk management — Not placing stops, using too wide of risk, or no clear target.
- Over-trading — Not every engulfing pattern is worthy. Quality over quantity matters.
Why This Pattern Belongs in Your Trading Toolkit
- Clear structure — The pattern gives defined criteria for entry, stop and target, which helps reduce emotional trading.
- Versatile across markets — Works in stocks, forex, futures or crypto. The pattern logic remains the same.
- Improves market awareness — As you look for the pattern, you become more attuned to shifts in sentiment rather than following indicators blindly.
- Enhances trade timing — Instead of entering after the reversal is underway, you can enter closer to the pivot, improving risk/reward.
Final Thoughts
The bearish engulfing pattern is one of the most potent reversal signals available via candlestick charting. The free video by Maverick Trading on “Bearish Engulfing Pattern – Find & Identify” provides traders with a clear, structured approach to recognising, validating and trading this pattern.
If you want to add a high-probability tool to your technical-analysis arsenal, watch the video, practice spotting the pattern on historical charts, and apply the rule-set documented above to your trading plan. With discipline and structure, the bearish engulfing can be a reliable entry into major trend shifts.
Unlock this power today in the Maverick Trading free video library—watch the video, internalise the rules, and trade with clarity.
