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Okay, so we know *what* a bearish engulfing pattern is. Now, how do we actually *spot* one in the wild? The good news is, it's not super complicated, but it does require a keen eye for detail. The key elements to remember when looking for this pattern are essential. Let's break down the steps, so you can easily identify them on your charts. First, you need to be in an uptrend. This is crucial. The pattern is a *reversal* pattern, so it only has meaning when it appears after prices have been rising. Next, you have to find a small bullish candlestick. This candlestick indicates that buyers are still around, but they might be losing their grip. The final step is to find a large bearish candlestick that *engulfs* the previous one. The body of the bearish candle must completely cover the body of the preceding bullish candle. The open price must be higher than the close price of the previous candle. The close price must be lower than the open price of the previous candle. Shadows do not matter. That's it! It may seem simple, but this is the secret to getting a good grasp of the *bearish engulfing* pattern!
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