๐ What is an engulfing candle?
$ETH printed two bearish engulfing candles in the last week, and both came before a drop. The first one marked the Oct 2 top near $2,777. The second one broke the range floor on Oct 7.
An engulfing pattern uses two candles. The second candle's body (open to close) is bigger than the first one's and fully covers it. It shows that one side took full control in a single candle. Bullish engulfing = a green body swallows a red one after a drop. Bearish engulfing = a red body swallows a green one after a rise.
๐ Live chart in the cover and in the image post below.
๐ How to spot it
โข Find the trend first. A bullish engulfing needs a drop before it. A bearish engulfing needs a rise before it
โข Candle 1 is small and goes with the trend (red in a drop, green in a rise)
โข Candle 2 opens near candle 1's close and closes past candle 1's open
โข Compare bodies only, not wicks. Body 2 must cover all of body 1
โข The bigger candle 2 is versus candle 1, and the higher its volume, the stronger the signal
๐ How traders use it
โข Entry: after candle 2 closes, or on a small pullback into candle 2's body on the next candle
โข Stop-loss: past the wick of candle 2. Below its low for bullish, above its high for bearish
โข Target: the next support or resistance level, or at least 2x the risk
โข Best spots: at a key level (range top, range floor, old high or low), not in the middle of nowhere
๐งช Live example: $ETH, Oct 2 โ Oct 9, 2026
Bearish engulfing #1 (daily, Oct 2):
โข Oct 1 was green: $2,686 โ $2,706
โข Oct 2 spiked to $2,777, then closed red at $2,669. Its body covered all of Oct 1's body
โข Volume was 1.6x the day before, right at the top of the range
โข ETH never closed above that high again
Bearish engulfing #2 (4H, Oct 7, 00:00 UTC):
โข The 4H candle before it was a small green: $2,692 โ $2,697
โข Then one red 4H body: $2,697 โ $2,611, about -3.2%
โข Volume was 6.4x the candle before. It broke the ~$2,635 range floor
โข ETH kept falling to $2,406 on Oct 8, about 13% under the Oct 2 high
The bullish engulfing that didn't happen (4H, Oct 8):
โข The red 4H candle into the low went $2,537 โ $2,436
โข The next candle bounced green, but only to $2,465
โข That green body covered about 28% of the red one. Not an engulfing, so no reversal signal yet
A bullish one on $BTC (daily, Oct 1):
โข Sep 30 closed slightly red. Oct 1 opened $83,624 and closed $84,880, covering it
โข The next day BTC tagged $87,220, then got rejected. A signal gives a move, not a guarantee
Where ETH is now:
โข Price about $2,483
โข 4H RSI(14) 30.9, close to oversold
โข 4H 20 EMA ~$2,548 and 50 EMA ~$2,611, both above price and falling
โข A 4H bullish engulfing at or above $2,406 would be the first real buyer signal. A close under $2,406 keeps the trend down
โ ๏ธ Common mistakes
โข Trading it without a trend before it. In a sideways chop, engulfing candles show up all the time and mean little
โข Counting wicks instead of bodies. The rule is about bodies
โข Ignoring volume. An engulfing on weak volume often fails
โข Acting before the candle closes. A big green candle can turn red in the last minutes
โ Quick checklist
โข Is there a clear trend before it?
โข Does body 2 fully cover body 1?
โข Is it at a key support or resistance level?
โข Is volume higher than on candle 1?
โข Is the stop past the wick, sized to 1-2% risk?
๐ฌ Do you trade engulfing candles on the 4H or the daily? ๐
Not financial advice. DYOR.