Many single candlestick patterns, such as dojis, hammers and hanging man, require the confirmation that a trend change has occurred. They become more significant to the market when they fulfill the following criteria: they have to emerge after an extended period of long bodied candles, whether bullish or bearish; and they must be confirmed with an engulfing pattern. This pattern occurs when a candle's body completely engulfs the body of the previous candle. A bullish engulfing commonly occurs when there are short-term bottoms after a downtrend. In Forex, a bullish engulfing will seldom open below the last candle's close, but usually at the same level. But a bullish engulfing will always close above the previous candle open price, and a bearish engulfing will always close below the previous candle open price. See below the picture of a bearish engulfing pattern for a better understanding. When engulfing occurs in a downward trend, it indicates that the trend has lost momentum and bullish investors may be getting stronger. Conversely, a bearish engulfing will occur when the market is at the top after an uptrend.
