The bearish engulfing is a two-candle reversal: a bullish candle followed by a bearish candle whose body completely engulfs the prior candle's body. Appearing after an uptrend, it signals a potential top.
Bulls lose control. The second bearish candle not only erases the prior day's gains but reverses further, completely engulfing the bulls' progress. An open-high-close-low day signals heavy distribution at the highs.
A clear top-reversal signal after an uptrend (win rate 61%). Exit longs or enter short after the bearish candle closes. Stop-loss above the high. Target = prior swing low or 1.5× the engulfing body.
Must appear after a clear uptrend. The bearish candle's body must fully cover the prior bullish body — wick engulfing doesn't count.