ncrypt | web3 research

The engulfing pattern is one of the important reversal signals; it consists of two candles, which are usually painted in different colors.
3 criteria for the engulfing pattern:
1. There must be a clearly defined uptrend or downtrend.
2. The body of the second candle must overlap the body of the first.
3. The color of the second candle must be different from the color of the first. The exception is when the candle has a very small body and resembles or is a doji.
Bullish engulfing pattern (Figure 1): during a downtrend, a white candle appears, which engulfs the smaller body of the previous candle with its body - this is a reversal signal at the bottom.
In Figure 2, everything is the opposite: the appearance of a black candle on an uptrend, the body of which engulfs the body of a white candle, is a reversal signal at the top.

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