Bearish Engulfing and Piercing pattern - I

Bearish engulfing 

How to recognize it? 

• There must be a proceeding uptrend 
• A shorter green candle followed by a long red candle 
• The longer red candle opens higher and closes lower than the shorter green candle, completely engulfing it. 

What is the psychology behind? 

• The green candle implies the control of the bulls following a prolonged uptrend 
• In next session, the market opens about the high of the green candle, suggesting continuation of the bullish force 
• The bulls then lose momentum, the bears take charge then send the price down during the session and eventually manage to close below the low of the green candle 
• The bears have now fully overridden the Bulls 

How do we trade it? 

• Look for the bearish engulfing at the top of an uptrend 
• Wait for the next candle to close below the law of the red candle to confirm the existence of bearish force 
• Open the short position upon confirmation 
• Place a stop loss below the high of the red candle