A Bearish Engulfing pattern is a two-candle reversal signal that forms at the top of an uptrend. The first candle is a small bullish (green) candle reflecting modest buying. The second candle is a large bearish (red) candle whose real body completely engulfs the body of the first candle opening above the previous close and closing below the previous open. This engulfing action signals that sellers have overwhelmed buyers decisively, suggesting a potential shift from bullish to bearish momentum. The pattern carries greater significance when it forms at a resistance level, after an extended rally, or on significantly higher volume on the bearish candle compared to the preceding bullish session.
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