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We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.


Key takeaways from this chapter

  1. Multiple candlestick patterns evolve over two or more trading days.
  2. The bullish engulfing pattern evolves over two trading days. It appears at the bottom end of a downtrend. Day one is called P1, and day two is called P2.
  3. P1 is a red candle in a bullish engulfing pattern, and P2 is a blue candle. P2’s blue candle completely engulfs P1’s red candle.
  4. A risk-taker initiates a long trade at the close of P2 after ensuring P1 and P2 together form a bullish engulfing pattern. A risk-averse trader will start the business the day after P2, near the close of the day.
  5. The stop loss for the bullish engulfing pattern is the lowest low between P1 and P2.
  6. The bearish engulfing pattern appears at the top end of an uptrend. P2’s red candle completely engulfs P1’s blue candle.
  7. A risk-taker initiates a short trade at the close of P2 after ensuring P1 and P2 together form a bearish engulfing pattern. After confirming the day includes a red candle, the risk-averse trader will start the business the day after P2.

49 comments

  1. Firoz says:

    Sir,
    If we have downtrend move and the last candle of that down move
    Is red and next candle is green in which it’s open is higher than privious day red candle close and the close of green candle is higher than open of red candle .
    Now what will happen

    • Karthik Rangappa says:

      That seems like a variation of a bullish engulfing pattern. You can go long provided you are satisfied with all other things in the checklist.

  2. Suresh Deval says:

    As the Green Candle open is higher than the previous Red candle close it doesn’t satisfy the BULLISH ENGULFING PATTERN condition the trend will not change and will continue the down

  3. Avneesh Saraswat says:

    Wont this be a sign of a reversal..?!

  4. Satyakam Chaudhary says:

    Hi Karthik, seems to be erroneous statement at interval 15:50 – 16:11. It should be ‘bears are in full control’ and not ‘bulls are in full control’, since it’s a downtrend. Please review once.

  5. Navya Malhotra says:

    At 3:14 of the video, notice that you said the CLOSE of D2 is greater than the OPEN of D1. That is absolutely false according to me. Do check and do the necessary corrections in the video ASAP as it may be misleading for new investors/traders like me. BTW, love your explanations and continue doing the good work😊👍!

  6. Navya Malhotra says:

    No problem, your efforts are really appreciable!

  7. Siddhant says:

    The video talks about the three candlestick patterns and has a reference to dojis and spinning tops about which there was no mention in the last video…please clarify.

  8. saumajeet paul says:

    sir , in bearish engulfing does the day 2 close < day 1 open

  9. saumajeet paul says:

    thank you sir , I was clearing the doubt because in video Prateek says the close of day 2 is greater then day 1

  10. Avtar says:

    Very interactive learning video. Appreciate the efforts made

  11. Sudarshan Kadge says:

    Hi, Is there a book available on Zerodha Versity?

  12. Krithick says:

    Yeah I too confused when you are explaining…please make the corrections ASAP.

  13. REjany says:

    At 3:14 of the video, notice that you erroneously mentioned D2 Close > D1 Open, this has to be D2 Close < D1 Open

  14. shivkumar says:

    A man of golden heart love you sir

  15. Harshwardhan Wanjari says:

    How come the open of D2 is priced lower than close of D1. What caused the price to drop between the close of D1 & open of D2.

  16. Imran bhat says:

    Sir, what do u mean by buyers are in control or sellers r in control

  17. Prem Chaudhari says:

    Sir, what is price action?
    I didnt understand. Please Explain

  18. Prince says:

    Sir , will all this be applicable if we see it on a 15 min chart or a 5 min chart for intraday trading ? but it is too difficult to identify the trend if we analyis a single day chart on 5 to 15 min time frame how to resolve this ?

  19. Shreyas K says:

    Sir what is the difference between bullish harami and piercing pattern?? towards the end of a downtrend ,a red candle will be formed on day p1 and on day p2 green candle with gap up and engulfing half of red candle,can I consider this as bullish harami??

  20. Adarsh Yadav says:

    The reliance chart that is shown as an illustration, has another bullish engulfing candle, however this didn’t lead to a trend reversal, any possible explanation for that ?

  21. Souvik says:

    Hi! In the chart of Reliance that is shown in the video (when bullish engulfing pattern is being explained), we can also see that on 1st Aug 19 there was a very good and convincing bullish engulfing pattern that was formed (with greater than average volumes + RSI was 27 on P1 and 32 on P2) but failed.
    So, is there any other way in which we can confirm whether the trend will reverse or not?

  22. Rajesh Kumar says:

    Sir,
    Your service is most appreciated.
    Hindi men bhi video banaiye, please.

  23. Sandeep says:

    What to do if we have multiple patterns with in a timeframe, for example in case of Haveles engulfing pattern is also visible with piercing pattern(3-4 candles before piercing pattern) ?

    • Karthik Rangappa says:

      Stick to the first pattern and go with it till either the SL is hit or the target is achieved.

  24. Mukesh Behera says:

    who is watching in 2024 ???????????????

  25. Robin says:

    Hi Karthik and team, just wanted to check and know if these videos are updated or not? Is there any changes in the content which is not here?
    Btw, these videos are really really helpful

    Regards
    Robin

  26. Arun says:

    Karthik,
    Navya’s comment seems to be rightbut it has not been corrected.
    Rgds

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