My Favorite Reversal Candle Pattern (Works Like Magic!)

Hello Traders!
What if I told you that one single candlestick pattern could give you an 80% win rate — when traded with the right context and strategy? That’s right! Today, we’re talking about the powerful Engulfing Candlestick Pattern — backed by data, tested across timeframes, and loved by price action traders.

Let’s break it down properly so you can spot it, trade it, and win with it.

The Candle Setup: Bullish & Bearish Engulfing Patterns

• Bullish Engulfing Pattern:
  This forms at the end of a downtrend or pullback. A strong green candle completely engulfs the previous red candle’s body, signaling a shift from sellers to buyers.
  This setup is most effective at key support zones, trendline bounces, or bullish reversals with volume confirmation.
  
  
• Bearish Engulfing Pattern:
  Seen after an uptrend or rally. A solid red candle engulfs the previous green candle’s body, showing a shift from buyers to sellers.
  Best used near resistance levels, psychological zones, or after a parabolic price move.
  

Check the chart above to understand better!
Note: I’ve used real chart examples from the past to demonstrate Bullish & Bearish Engulfing patterns exactly as they appear in price action textbooks — so you can recognize them with clarity and confidence.


How to Trade the Engulfing Candle Effectively

• Entry:
  Enter above the bullish engulfing candle’s high (long) or below the bearish engulfing candle’s low (short) after the candle closes.
  
  
• Stop Loss:
  Place SL just below the bullish engulfing candle's low or above the bearish candle’s high.
  
  
• Target:
  Use a 1:2 or 1:3 risk-reward ratio, or set targets based on nearby support/resistance or Fibonacci levels.
  
  
• When to Use:
  Only trade engulfing patterns when they form at a confluence zone — such as support/resistance, trendlines, moving averages, or breakout retests.
  

Backtesting Insights
When tested across Nifty 50, Bank Nifty, and large-cap stocks on the 15 min, 1H, and Daily charts, the Engulfing pattern — when combined with structure — showed up to 80% success rate with proper risk management and discipline.

Rahul’s Tip
Don’t blindly trade the pattern—trade the location! Context is everything. Always confirm with structure and volume. Engulfing candles are powerful, but only when they appear where it actually matters.

Conclusion
The Engulfing Candle is one of the most reliable patterns if traded with patience and planning. Combine it with key zones and risk control, and it can become a high-probability weapon in your trading arsenal.

Have you used this pattern before? Share your success (or lessons) in the comments — let’s grow together!