Similar to the One Black Crow, the Bearish Engulfing pattern also closes below the preceding day’s opening candle reflecting the bears have taken back more territory than the bulls gained. However, the big difference between the two is the Bearish Engulfing pattern gaps up at the market open instead of gapping down like the One Black Crow.
Like the One Black Crow pattern, the Bearish Engulfing candlestick patterns have three primary reasons it is particularly bearish:
You should look for this pattern at known resistance areas. When you identify it in this location, the predictive power is very high.
Similar to the One Black Crow, if you do enough candlestick analysis, you will start to notice the Bearish Engulfing signals occurring at resistance in a large percentage of bearish swings.
The One Black Crow and Bearish Engulfing pattern are two extremely powerful bearish reversal candlestick patterns. They both occur with a relatively high frequency, and in both cases, they are a great predictor of an impending bearish swing.