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The Bearish Engulfing Pattern is a trend reversal pattern used by traders to find the upcoming bearish trend. If you are trading for a while you must have found difficulty in spotting trend reversal patterns. However, that’s not the case with the Bearish engulfing pattern. Spotting and trading with this candlestick pattern is super easy and simple. In this blog, I will cover everything about the Bearish engulfing pattern and how you can trade properly with this pattern.
What is Bearish Engulfing Pattern?
As I said above, The Bearish Engulfing pattern is a trend reversal pattern used by traders to find the upcoming bearish trend. This pattern usually appears after a big uptrend. It is formed by two consecutive candles with the first candle being bullish and the second candle being bearish that completely engulfs the body of the first candle. The appearance of this pattern signals an upcoming bearish trend and a change in the sentiments of sellers. The Bearish Engulfing pattern indicates that the sellers have taken control over the market overpowering the buyers and pushing the price lower. You can consider the appearance of this pattern as a potential selling opportunity.
How to spot Bearish engulfing pattern on Olymp Trade
In order to spot Bearish engulfing pattern on Olymp Trade follow the steps below
Step 1: Log in to your Olymp Trade chart.
Step 2: Set your default chart to Japanese candlestick
Step 3: Look for a big uptrend with the last candle as a medium-sized bullish candle.
Step 4: Lastly, Look for a bearish candle that completely engulfs the last bullish candle with the opening and closing above the same.
How to trade with Bearish Engulfing pattern on Olymp Trade?
As I mentioned, Bearish Engulfing pattern is a trend reversal pattern. The appearance of this pattern signals an upcoming bearish trend. This pattern is very powerful however, You shouldn’t simply rely on this pattern you always use a trend confirmator. For Instance, In this article, I am going to use RSI Indicator. When you see a Bearish Engulfing pattern on Olymp Trade plus the RSI line is above 70, It signals a strong bearish trend and here, you place a sell trade.
In case you don’t know
RSI or Relative Strength Index is a trend indicator via which you find the upcoming trends and reversals. This indicator was developed by J. Welles Wilder. The main comments of this indicator is the moving average line, Overbought level and Oversold level. when the moving average line is above the overbought level. It signals an upcoming bearish trend and vice versa when the moving average line is below the oversold level it signals an upcoming bearish trend.