An engulfing pattern is primarily considered a reversal pattern, not a continuation pattern. Its core purpose in technical analysis is to signal a potential shift in market control from buyers to sellers or vice versa. The structure itself reflects a sudden and decisive change in momentum. In a bullish engulfing pattern, sellers dominate the first candle, but buyers completely overwhelm them in the second candle. In a bearish engulfing pattern, the opposite happens — buyers lose control as sellers take over aggressively. This shift in dominance is what makes the pattern inherently reversal oriented. It typically ... (full story)