A bearish engulfing candle is a candlestick pattern often seen in financial markets such as stocks, forex, and cryptocurrencies.
A bearish engulfing candle comprises two candles: the first is a smaller candle, either bullish or bearish, followed by a larger bearish candle that completely "engulfs" the previous candle.
This pattern is significant because it represents a shift in market sentiment from bullish to bearish. The initial candle may have indicated positive market sentiment and buying pressure, but the subsequent bearish candle shows that selling pressure has become dominant, causing the price to fall.
Traders often use bearish engulfing candles to signal to enter short positions or close out long positions. It is important to note, however, that no single candlestick pattern can be relied upon completely, and it is important to consider other factors such as volume, trend lines, and support and resistance levels when making trading decisions.