An engulfing candle is a two-bar pattern. One bar closes in the opposite direction to the last one, and it does so decisively enough to swallow the whole of it.
About the Numbers in This Tutorial
The figures below were measured on SPY in July 2026, across the full price history the tool loads. Numbers like these move slowly, since each new session is one more observation in a very large sample, so expect small differences rather than different conclusions.
Bodies, not wicks
Every candle has a body, the distance between its open and its close, and wicks, the thin lines running out to the high and the low. The engulfing pattern is about bodies only. The wicks can stick out anywhere and the pattern still counts.
That matters because the body is where the session started and finished. A long wick says price visited a level; the body says price was willing to close there.
These are the two shapes the tool looks for. Only the bodies decide whether a bar qualifies, so the wicks can fall anywhere.
Why traders watch it
The appeal is the shift in control it appears to show. A bullish engulfing means sellers finished the previous bar in charge, then buyers took back all of that ground and more within a single bar. A bearish engulfing is the same reversal in the other direction.
Whether that shift actually leads anywhere is a separate question, and it is the one this tool exists to answer with the ticker's own history rather than with tradition.
Key Idea
The pattern is a fact about two bars. It is not a forecast. Chapters 3 and 4 are about what has followed it, which turns out to be a different matter from what the pattern is named after.
The definition is mechanical, which is what makes it countable. Four conditions have to hold at once.
The exact rule
For a bullish engulfing bar, all four of these:
The prior bar closed below its open, so it was red.
The current bar closed above its open, so it is green.
The current bar opened at or below the prior close.
The current bar closed at or above the prior open.
The bearish case is the same test with the colors reversed: prior green, current red, opening at or above the prior close and closing at or below the prior open.
Note the "at or" in conditions 3 and 4. An exact tie still qualifies, so a bar that opens precisely at the prior close and closes precisely at the prior open counts. Anything narrower does not.
Worth Knowing
The pattern does not care about gaps, volume, trend, or where the bar sits in a range. Four price comparisons decide it and nothing else. That is a strength for counting and a weakness for interpreting, which Chapter 6 comes back to.
Daily and weekly
The Period toggle switches between daily bars and weekly ones. Weekly bars are built by grouping the daily history into calendar weeks, each week taking its first day's open, its last day's close, and the highest high and lowest low across the week.
The same four conditions are then applied to those weekly bodies. A weekly engulfing is a much rarer, much larger event: SPY has 151 bullish engulfing days in its history but only 55 bullish engulfing weeks.
Your choice of period sticks as you move between tickers, so if the numbers look unexpectedly sparse, check which toggle is lit.
What it needs to run
A ticker needs at least 30 daily bars before anything is computed, and at least 20 bars in the chosen period. A recent listing analyzed weekly will often have too little history and the tool will say so rather than produce a number from a handful of events.
Chapter 3
Reading the Two Columns
The results are two side-by-side columns, bullish on the left and bearish on the right, each measured entirely separately.
Three horizons
Every engulfing bar is followed forward from its close and measured at three distances. On daily they are the next day, the next 5 days, and the next 10 days. On weekly they become the next week, the next 4 weeks, and the next 10 weeks.
Each horizon reports the same three things.
The green/red odds
What share of the events finished higher than the engulfing bar's close by that horizon, and what share finished lower. These are shares of settled outcomes, so a bar too recent to have a full 10 days behind it is left out of the 10-day row while still counting in the next-day row.
The two average moves
This is the row most people misread. "Next day avg. green move" is the average of only the up outcomes. "Next day avg. red move" is the average of only the down ones. Neither is the average of everything.
They are split deliberately, because the pair tells you something a single average would bury. Take SPY's bullish engulfing at the next-day horizon: the up days averaged +0.74% and the down days averaged −0.99%. The down moves were larger. A blended average would have shown a small number and hidden that asymmetry completely.
Common Mistake
Reading "avg. green move" as the expected outcome. It is the average of the wins only, and it means nothing without the odds row above it and the average loss beside it. Read all three together or none of them.
The occurrence count
Above each block, the number of times the pattern has appeared. Treat it as the weight behind everything underneath. A column built on 40 events is a much softer claim than one built on 200, and the two sides rarely have the same count.
Chapter 4
What the Numbers Actually Say
Here is where the tool earns its place, because the measured history does not agree with the pattern's reputation.
SPY, daily
Pattern
Occurrences
Next day green
Next 5 days green
Next 10 days green
Bullish engulfing
151
54%
48%
62%
Bearish engulfing
182
62%
59%
64%
Measured on 21 July 2026. The bearish pattern was followed by a higher close more often than the bullish one at every horizon shown.
Read that again. On SPY, the pattern named for a downside reversal was followed by an up day 62% of the time, while the pattern named for an upside reversal managed 54%. At the five-day mark the bullish side actually finished lower more often than not.
AAPL, daily
Pattern
Occurrences
Next day green
Next 5 days green
Next 10 days green
Bullish engulfing
176
50%
56%
63%
Bearish engulfing
213
50%
61%
59%
Measured on 21 July 2026. Both sides land on a coin flip the next day, and both drift greener as the horizon lengthens.
Different ticker, same shape of answer. The next-day column says almost nothing, and both sides get greener the further out you look.
The pattern that keeps appearing
Across both tickers and both sides, the green share rises with the horizon. That is the clue that most of what you are looking at is not the pattern at all. Both of these instruments have spent their history drifting upward, so any rule that hands you a starting point and waits ten bars will show a green majority.
The tool gives you the odds after an engulfing bar. It does not show you the odds after an ordinary bar, and without that baseline a 62% green reading cannot be separated from the ticker simply going up over time. Chapter 6 has more on this, because it is the single most important limit here.
One more asymmetry worth noticing: bearish engulfing bars outnumber bullish ones on both tickers, 182 to 151 on SPY and 213 to 176 on AAPL. The shape is not symmetrical in the wild, even on instruments that rose over the period.
The tool opens on a scanner rather than on a single ticker, and there are two more views underneath the statistics.
The landing table
Arriving without a ticker gives you a table: Ticker, Price, Engulfing Daily Status and Weekly Engulfing Status. Two tabs sit above it, My Watchlist and Top Signals. Click any row to open that ticker's full analysis, and the back arrow beside the title returns you to the table.
Each status cell draws the prior and current bars as real miniature candlesticks on a shared price scale, so you can see the shape rather than read a label. Hovering gives the actual open and close of each bar. A green check means the pattern has formed; a grey cross means it has not.
The One Thing to Know Here
The table's check mark flags bullish engulfing only. A bearish engulfing bar shows a grey cross, exactly like a ticker with no pattern at all. The scanner is a one-sided screen; only the single-ticker view covers both directions.
The daily cell compares yesterday with today, so it is provisional until the close. A bar can qualify at noon and stop qualifying by the bell, because the body is only final once the session ends. The weekly cell compares last week with the current week so far and is provisional in the same way until Friday.
The event log
Under the statistics sits a sortable log of every engulfing bar the tool found, newest first, with its date and its forward returns at each horizon. Click any column to sort. The most recent bar appears here with ongoing in the forward columns rather than a number, because those outcomes have not settled yet. Those rows are excluded from the averages above, which is why the log can be longer than the counts imply.
The chart log
Below that, the price history drawn as candlesticks with every engulfing bar shaded. The legend filters to bullish or bearish only, arrows step from one occurrence to the next, and clicking a row in the event log jumps the chart to that date. This is the fastest way to sanity-check a count: if the shading looks wrong, the number above it will be too.
Both views have their own guided walkthrough built into the tool. Open either one with the tour already running: