What is the bullish engulfing pattern?

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The bullish engulfing pattern is a chart pattern that is used as a bullish signal in the stock market. It consists of two different days.

The first day of the pattern is a bearish day. During this day the stock will close lower then it opened. It does not necessarily need to close lower than the previous day.

The second day is a bullish day. It is an upward movement that completely engulfs the down day. That means the price action starts below the close of the last day and finishes above the close for the last day. Below is an example of how the bullish engulfing pattern looks.