The bullish engulfing is a two-candle bottom reversal: a bearish candle followed by a bullish candle whose body completely engulfs the prior candle's body. Appearing after a downtrend, it signals a potential bottom.
Bears lose control. The second bullish candle not only recovers the prior day's losses but reverses further, engulfing the bears' progress. An open-low-close-high day signals aggressive accumulation at the lows.
A clear bottom-reversal signal after a downtrend (win rate 63%). Enter long after the bullish candle closes. Stop-loss below the low. Target = prior swing high or 1.5× the engulfing body.
Must appear after a clear downtrend. The bullish candle's body must fully cover the prior bearish body. Volume expansion strengthens the signal.