Bullish Engulfing
Bullish reversal2 sessions
A down day, then an up day that swallows it whole. The clearest two-session picture of demand arriving.
The shape: A down session, then an up session whose body completely covers it
What it is
Yesterday closed lower than it opened. Today opened at or below yesterday's close, traded through the entire prior body, and closed above yesterday's open. One session undid the other completely.
It matters because of what it took. Covering that whole range means buyers were willing to pay progressively higher prices all day, in a name that was falling the day before.
The detector requires the second body to be genuinely larger than the first — a marginal overlap is not an engulfing — and, when gated, a prior decline and a level to reverse at.
How to read it
The strength is in the size difference. An up session twice the prior body says far more than one that clears it by a cent.
The engulfing bar's own low becomes the level. Losing it in the sessions that follow is what says the demand that showed up did not stay.
Engulfings at the end of a long slide read differently from engulfings inside a range. The chart's gate is doing that filtering for you — everything it marks has a decline behind it.
On the chart: a triangle below the bar for a bullish reading, above it for a bearish one, a diamond for indecision. Hover any mark to see the pattern and what qualified it — the level it formed at and the move it followed.
Using it on the wheel
Two-session reversals are where premium sellers often find the combination they want: implied volatility still carrying the fear of the decline, and price action that suggests the decline has at least paused.
The engulfing bar's low is a natural reference for strike selection — a level the market set, in public, in a single session, rather than a percentage you picked.
It says nothing on its own about how far a move can run. The wheel's arithmetic — cushion to the strike, premium relative to that cushion, assignment quality of the name — is unchanged by a candle.
Like everything in this guide, these are descriptions of conditions and reference levels — context for your own decisions, not instructions to trade.