Characteristics of bullish engulfment pattern:
(1) Before the emergence of long-term engulfment, the price movement must be in a clear and identifiable downward trend, even if this trend is only short-term.
② The multi-head engulfing form must consist of two K-lines, and the entity of the second K-line must cover the entity of the first K-line (not necessarily engulfing the upper and lower shadow lines of the first K-line).
③ The second entity in bullish engulfment form must be the reverse color of the first entity. There is an exception to this standard, that is, the entity of the first K line is very small, so small that it almost constitutes a reticle. In this way, if a small entity is swallowed up by a huge red entity in the downward trend, it can also constitute a bottom inversion form.
(4) In the form of long-term engulfment, the entity of the next day is accompanied by excessive trading volume, which is a phenomenon of rapid rise and fall.
⑤ In the form of multi-head engulfment, there is also the phenomenon of multi-entity engulfing forward the next day.
Bear market engulfing form:
The bearish engulfing pattern is just the opposite of the bullish engulfing pattern.
Characteristics of bear market engulfing form;
① The pattern of short engulfment appears in an obvious upward trend.
(2) This form must be composed of two K lines, and the second K line entity must cover the first K line entity.
(3) The first K line must be a positive line and the second K line must be a negative line.
④ In the bearish engulfing pattern, the entity on the first day is very small, while the entity on the second day is very large. This situation shows that the driving force of the original trend is fading, while the potential power of the new trend is growing.
⑤ In the form of bearish engulfment, the second entity is accompanied by excessive trading volume. This is a huge explosion of shipments.
⑥ In the bearish engulfing pattern, there is also the phenomenon that many entities engulf forward the next day.