The engulfing pattern is a two-candle pattern where the second candle’s body fully covers the first candle’s body. On Tradetron you can detect it with the ENGULFING keyword, found under the Position function.
What it looks like
Bullish engulfing (after a fall)
- Candle 1: a small red candle.
- Candle 2: a larger green candle that opens below candle 1’s close and closes above candle 1’s open.
Bearish engulfing (after a rise)
- Candle 1: a small green candle.
- Candle 2: a larger red candle that opens above candle 1’s close and closes below candle 1’s open.
What it means
A bullish engulf shows buyers took over from sellers within one candle. A bearish engulf shows the reverse. Traders often read it as a possible change of direction, not a certainty.
Points traders usually check
- Location: a pattern near a support or resistance level is read differently from one in a sideways, choppy market.
- Wait for the close: a candle that looks like an engulf mid-way can change before it closes.
- Size: a second candle that barely covers the first is a weaker signal than a clearly larger one.
A common way traders define risk:
| Bullish engulfing | Bearish engulfing | |
|---|---|---|
| Entry | After candle 2 closes | After candle 2 closes |
| Stop loss | Below the pattern’s low | Above the pattern’s high |
| Usual location | Near support | Near resistance |
Using the ENGULFING keyword
- In the Strategy builder, add an entry condition and pick the Position keyword.
- Choose ENGULFING from the function list.
- Set the instrument, timeframe and candle offset -1 so it reads the last completed candle.
ENGULFING ( Symbol ( Instrument Name ( NFO, NIFTY 50,,,, ) , 5m, All ) ) , -1
Reading the output
| Output | Meaning |
|---|---|
| Greater than 0 | Bullish engulfing |
| Less than 0 | Bearish engulfing |
For a buy condition, set the output equal to 1:
For a sell condition, set the output equal to -1:
Do not use offset 0. That is the candle still forming, and the pattern will look like it never fires. Test the strategy in Live Offline before going live.
Common mistakes
- Treating every engulfing candle as a signal.
- Acting before the candle closes.
- Ignoring the trend before the pattern.
- Trading without a stop loss.
For education only. This is not investment advice. Past patterns do not predict future results.
Edited with AI from the original Tradetron article, checked against current docs (Oct 2026). Spot something wrong? Tell us in the Community.