If you’re aiming to earn consistently through crypto trading on Binance, learning how to spot Engulfing Candlestick Patterns can be a game changer. These patterns often signal trend reversals — giving you a chance to enter trades with strong momentum and better accuracy.
Below is a simplified guide to help you trade Bullish and Bearish Engulfing Candles effectively
1. What is a Bullish Engulfing Candle?
A Bullish Engulfing Pattern appears during a downtrend and indicates a potential trend reversal to the upside. This is a high-probability setup for long (buy) positions.
Key Characteristics:
Forms after a downtrend
First candle: Small bearish (red) candle
Second candle: Large bullish (green) candle that completely engulfs the previous candle's body
Higher volume increases pattern reliability
Trading Plan:
Entry: After the bullish engulfing candle closes
Stop Loss (SL): Below the low of the engulfing candle
Take Profit (TP): Previous resistance zone or Fibonacci extension (e.g., 1.618)
2. What is a Bearish Engulfing Candle?
A Bearish Engulfing Pattern appears during an uptrend and signals a possible reversal to the downside. This is ideal for shorting or securing profits on long trades.
Key Characteristics:
Forms after an uptrend
First candle: Small bullish (green) candle
Second candle: Large bearish (red) candle that completely engulfs the previous candle's body
Confirmed better with increased volume
Trading Plan:
Entry: After the bearish engulfing candle confirms
Stop Loss (SL): Above the high of the engulfing candle
Take Profit (TP): Previous support zone or Fibonacci retracement (e.g., 0.618)
3. Visual Breakdown of Engulfing Patterns
Use Binance charts to spot these patterns:
A green zone highlights a Bullish Engulfing setup
A red zone shows a Bearish Engulfing setup
These setups are commonly seen on top pairs like BTC/USDT, ETH/USDT, and trending altcoins.
4. Key Takeaways for Binance Traders
Reversal Signals: Engulfing candles often mark trend exhaustion
Volume Confirmation: Stronger signals when backed by volume spikes
Use with Other Indicators: Combine with RSI, MACD, trendlines, or support/resistance
Risk Management: Always trade with stop-loss and calculated position sizing