StoxBox
Login

Bearish Engulfing and Doji for Trading Success Profitable Strategies with Candlestick Patterns

  1. Technical Analysis
    1. How Technical Analysis Can Help You Make Informed Decisions in Mastering Stock Trading
    2. Technical Analysis Setting Realistic Expectations
    3. Introduction to Technical Analysis and Assumptions
    4. Technical analysis for Profitable Trades Analyzing Open, High, Low, and Close
    5. Candlestick Charts How Line and Bar chart Enhance Market Analysis
    6. Japanese Candlesticks History, Anatomy From Ancient Japan to Global Trading Phenomenon
    7. Time Frames in Technical Analysis Unlocking the Power of Choosing the Right Interval for Successful Trading strategy
    8. Candlestick Patterns How to Identify and Interpret Trading Signals
    9. Marubozu and Bullish Marubozu Understanding What is Essential Single Candlestick Patterns for Traders
    10. Marubozu Candlestick Setting Stop Loss The Ultimate Guide to Trading Patterns
    11. Spinning Top Candlestick Navigating Downtrends A Trader’s Guide to Identifying Reversal Signals
    12. Spinning Top and Doji How to Interpret and Navigating Market Uncertainty
    13. Paper umbrella and hammer candlestick pattern Unlock Profitable Trades
    14. Hanging man candlestick pattern Profitable share market trading Strategies
    15. Shooting Star Candlestick Pattern Boost Your Trading Success Guide
    16. Engulfing Patterns and Bullish Engulfing Signals Unlock Trading Opportunities
    17. Bearish Engulfing and Doji for Trading Success Profitable Strategies with Candlestick Patterns
    18. Multiple Candlestick Patterns Insights and Strategies Boost Your Trading
    19. Bullish Harami Candlestick Pattern for Trend Reversal Strategies
    20. Shorting Guide using the Bearish Harami Pattern Trade Reversals with Confidence
    21. Morning Star Candlestick Pattern and Gap Analysis To Maximise Your Profits
    22. Evening Star Candlestick Pattern Learn How to Identify and Trade to Boost Your Trading Success
    23. Support and Resistance Basics A Comprehensive Guide to Setting Targets and Navigate the Markets with Confidence
    24. Support and Resistance Learn How to Draw and Identify Key Levels Unlocking Trading Opportunities
    25. Support and Resistance Advanced Trading Strategy Analysing Reliability and Optimisation
    26. Volume Trends How to Leverage for Successful Trading Strategy
    27. Volume Analysis A Key Checklist for Successful Stock Trading
    28. Moving Averages A Comprehensive Guide for Trend Analysis in Stock Trading
    29. How to Use Moving Averages for Profitable Trading Strategy and Potential Opportunities
    30. Moving Average Crossover Boost Your Trading Success with A Reliable Strategy
    31. Technical indicators How to Use Technical Tools for Better Decision-Making Unlocking the Power of Trading
    32. Relative Strength Index RSI Analysing Overbought and Oversold Signals to Boost Your Trading Strategy
    33. MACD How to Interpret and Utilize Moving Average Convergence and Divergence for Profitable Trading
    34. Bollinger Bands The Power of Indicators in Trading and checklist
    35. Fibonacci Retracements Unravelling the Power in Stock Markets
    36. Mastering Fibonacci Retracement A Step-by-Step Guide for Effective Trading
    37. Dow Theory Decoding Unveiling the Principles of Technical Analysis
    38. Dow Theory Patterns Unlocking Trading Opportunities with Double and Triple Formations
    39. Trading Range Explained chart indicator example strategy Profit from Market Ranges
    40. Flag Pattern and Range Breakout How to Capitalise Trading Beyond Boundaries
    41. Risk reward ratio Understanding RRR in Dow Theory
    42. Technical Analysis Tools for Traders Charting Software Guide Enhance Your Trading
    43. How to Select Stocks for Trading Success and Building Your Opportunity Universe
    44. Short Term Trading Unleashing the Power of Scalping Strategies
    45. ADX Indicator and 7 more indicator tools for Trend Strength Analysis
Previous lesson Next lesson
Marketopedia / Technical Analysis / Bearish Engulfing and Doji for Trading Success Profitable Strategies with Candlestick Patterns

The bearish engulfing pattern

The bearish engulfing pattern is a two-candlestick sign suggesting the end of an uptrend. This phenomenon mirrors its bullish counterpart, however, it suggests taking a short position instead.

Have a glance at the chart shown below. Pay attention to the bearish engulfing pattern encircled; it is made up of two candles. It is evident that: 

  1. To start, the bulls are firmly in charge, driving up costs.
  1. On P1, the market increased as expected and reached a new peak, solidifying a bullish trend.
  1. On P2, as anticipated, the market begins higher and looks to reach a new peak. Nonetheless, at this apex, unanticipated selling pressure kicks off, putting the bulls in an awkward position.
  1. The sellers drive the prices down, creating a sense of unease amongst investors who had held long positions. The stock finishes below the P1 open, bringing an end to the day.
  1. The bearish action on P2 reveals that the bulls may have been overpowered, and it is likely that selling pressure will persist in the coming days.
  1. The goal is to take advantage of the likely decrease in prices by shorting either the index or the stock.

The process would be as follows:

  1. The bearish engulfing pattern implies a possible short position.
  1. The risk-taker takes action on the same day after verifying two requirements.

– At P2, the opening price is more elevated than P1’s final rate.

– At 3:20 PM, the price on P2 is lower than P1’s open, aligning with the conditions of a bearish engulfing pattern. A logical conclusion would be that this is indeed what we are seeing.

  1. The risk-averse will wait until the day after P2 to initiate the trade, ensuring that it is a red candle day.
  1. Given that the bearish engulfing pattern is a 2-day formation, it is logical to take a chance.

This is strictly based on one’s willingness to accept risk.

The presence of a doji

The chart is intriguing, several experts have taken advantage of such trading chances in the past, they firmly advocate one to take the opportunity here. It can be hugely rewarding!

Have a glance at the chart, what elements grab your attention?

  1. An evident rise is visible.
  1. At the end of an upward rally, a bearish engulfing pattern has appeared.
  1. The day after P2, there was a formation of a doji.

Several experts’ trading experiences have taught them that when a doji follows a recognizable chart pattern, the opportunity is greater. In addition to this, we would like to highlight the chart analysis methodology. It’s important to look at more than just what is shown on P1 and P2; by combining two different patterns, we gain a greater insight into market conditions.

    captcha


    Marketopedia
    Technical Analysis
    Copy link
    Twitter Facebook Linkedin
    Previous lesson Next lesson
    StoxBox
    © 2021 BP Equities Pvt. Ltd.
    All Rights Reserved
    StoxBox Instagram
    StoxBox Facebook
    StoxBox Twitter
    StoxBox Youtube
    StoxBox Linkedin
    StoxBox Whatsapp
    Get the app
    StoxBox Footer
    StoxBox Google Play Store
    Products
    MentorBox
    HotBox
    More

    *All subscription pricing plans mentioned across the website are exclusive of 18% GST

    By signing up, you agree to receive transactional messages on WhatsApp. You may also receive a call from a BP Wealth representative to help you with the account opening process

    Disclosures and Disclaimer: Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by BP Equities Pvt. Ltd. Investors should consult their investment advisor before making any investment decision. BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), IN-DP-CDSL-183-2002 (CDSL), INH000000974 (Research Analyst), CIN: U45200MH1994PTC081564. Please ensure you carefully read the Risk Disclosure Document as prescribed by SEBI | ICF

    Attention Investors

    1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
    2. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
    3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
    4.  Investors may please refer to the Exchange’s Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.
    5. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.

    Issued in the interest of Investors

    Communications: When You use the Website or send emails or other data, information or communication to us, You agree and understand that You are communicating with Us through electronic records and You consent to receive communications via electronic records from Us periodically and as and when required. We may communicate with you by email or by such other mode of communication, electronic or otherwise.

    Investor Alert:

    1. Prevent Unauthorised Transactions in your demat account –> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from CDSL on the same day………………….issued in the interest of investors.
    2. KYC is one time exercise while dealing in securities markets – once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
    3. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor’s account.

    BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), INZ000030431 (MCX/NCDEX), IN-DP-CDSL-183-2002 (CDSL),
    INH000000974 (Research Analyst) CIN: U45200MH1994PTC081564
    BP Comtrade Pvt Ltd – SEBI Regn No: INZ000030431 CIN: U45200MH1994PTC081564

    For complaints, send email on investor@bpwealth.com

    Copyrights © 2022 BP Group All Rights Reserved