An engulfing pattern is two candles where the second body fully covers the first body in the opposite direction. It is one of the clearest two-candle momentum signals because it shows control passing decisively from one side to the other within a single period.
Bullish engulfing
A small red candle followed by a larger green candle whose body engulfs it. Sellers were in control, then buyers overwhelmed them and closed above the prior open. At the bottom of a pullback or downtrend, this is a high-quality reversal cue.
Bearish engulfing
The mirror image: a small green candle then a larger red one that engulfs it, at the top of a move. Buyers were in control, then sellers took over. The pattern is strongest when the engulfing candle is large, on rising volume, and lands at a known level.
What strengthens it
Bigger engulfing body, higher volume on the engulfing candle, and a location at meaningful support or resistance all add conviction. An engulfing pattern in the middle of a chop range is far weaker than one at the edge of structure.