Engulfing Candle

An engulfing candle is a two-candle chart pattern in which the second candle’s body fully covers the first candle’s body, and its direction is opposite to the first.

KCM Academy Editorial Team
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Last updated 27 October 2026

An engulfing candle is a two-candle pattern in which the body of the second candle fully covers the body of the first. The second candle also closes in the opposite direction to the first. It is a chart-reading convention, so state the rule you use; the two common versions are below.

To read it you need the parts of a candle: the body runs from open to close and the wicks reach the high and low. Those are explained in the candlestick anatomy lesson.

What are bullish and bearish engulfing candles?

A bullish engulfing candle is a bullish candle whose body covers a prior bearish body; a bearish engulfing candle is the reverse, after a bullish candle. In both, the second candle closes beyond the first candle's open, in the opposite direction, so the whole first body sits inside the second.

A bullish candle closes above its open and a bearish one closes below it, as covered in bullish vs bearish. Colour is only a chart setting: MetaTrader 5 lets you choose the bull candle and bear candle colours.

Two engulfing patterns: on the left, after falling candles, a small red candle followed by a larger green candle whose body covers it; on the right, after rising candles, a small green candle followed by a larger red candle whose body covers it
In an engulfing pattern the second body covers the whole first body and closes the other way.

Do the wicks have to be covered too?

No: the common version compares bodies only and ignores the wicks, while a stricter version also needs the second candle's high and low beyond the first's. Neither version is official, so state which rule you use before comparing examples. The worked example below passes the body rule and fails the stricter one.

Worked example. On a USDZAR H4 chart, the first candle is bearish, opening at 18.3000 and closing at 18.2400, with a high of 18.3400. The second candle opens at 18.2300, closes at 18.3200 and has a high of 18.3350. Its body (18.2300 to 18.3200) covers the first body (18.2400 to 18.3000), so it is a bullish engulfing candle under the body-only rule. Under the stricter rule it would not count, because its high of 18.3350 is below the first candle's high of 18.3400.

How does it show in MetaTrader 5?

MetaTrader 5 does not label engulfing candles, so you compare two adjacent candles yourself on a candlestick chart. It draws candlesticks and lets you set the body colours. Switch to candlesticks with Alt+2, then use the Crosshair and Data Window to read each candle's exact open and close before deciding whether one body covers the other.

Is an engulfing candle a reversal signal?

No: an engulfing candle is not a reversal by itself, because it only describes what two finished candles did. Traders read it with the trend before it, nearby support and resistance and the next candle's close. Check the higher timeframe too, since the same period can look different there.

Related patterns span more candles, such as the morning star, which has three.

Sources

Learn it properly in the full lesson: Candlestick Chart: What It Is and How to Read One

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