Detection compares the Open and Close of adjacent closed candles. Bullish Engulfing is interpreted in the context of a preceding decline, Bearish Engulfing after an advance; geometry and interpretation are separate conditions.
The body is the interval between Open and Close. StockCharts does not require engulfing the preceding candle's High and Low; Engulfing Pattern is therefore not the same as completely enclosing its price range. [2]
StockCharts describes a down candle that is not Doji, followed by an up candle whose body engulfs the first body. A reversal interpretation assumes a preceding decline and further confirmation through rising prices. [1]
The opposite variant starts with an up candle that is not Doji, followed by a down candle with an engulfing body. StockCharts places it after an advance; a potential reversal needs further confirmation through falling prices. [2]
Our example requires strictly exceeding both boundaries of the first body; equality is insufficient. This is an explicit choice for this test. An implementation allowing equality may identify different occurrences, so do not mix the rules. [4]
StockCharts requires a preceding trend for a reversal interpretation. Your test must define its measure in advance; body engulfing alone does not show that this context was also satisfied. [1]
The Close of a live candle can change. Its body may engulf the preceding body during the period and lose that property before closing; detection on closed data cannot be presented as earlier knowledge. [3]
If a rule requires another candle, its result becomes available only later. Separate pattern detection, confirmation and trade execution in the test to avoid lookahead bias. [4]
Define entry, exit, position size and costs including Slippage. Evaluate all matching occurrences; a selected successful picture or a pattern name does not establish future profitability. [4]
Engulfed bodies, unengulfed shadows
For the clearest picture, read this entry together with Candlestick Pattern, Candlestick chart, Doji, Market Structure Analysis, Slippage, Backtesting. The reverse links also lead from Candlestick Pattern, Hammer and Shooting Star.
01Must the second candle also engulf both shadows?+
No. The basic description of Engulfing Pattern concerns the bodies between Open and Close. Engulfing the full High–Low range is a different condition.
02Is geometry enough to confirm reversal?+
No. Distinguish the preceding trend, completed shape and any later confirmation. Even satisfying them does not guarantee a profitable trade.