Level 4 · Lesson 3 of 16 · 6 min read
Engulfing, Harami, Tweezers: Two-Candle Patterns
When two candles tell a complete story, reversals often start there.
Researched and written by Laurent Why Two-Candle Patterns Are Powerful
A single candle shows one period's result. Two candles show cause and effect. They capture the moment when one side tried, then the other side responded. That's where reversals often start.
Engulfing Patterns
The most widely used two-candle reversal patterns. One candle "engulfs" the previous candle's body.
Bullish Engulfing
After a downtrend
A red candle is completely covered by the following green candle. Buyers overwhelmed sellers. Watch for this at support levels.
Bearish Engulfing
After an uptrend
A green candle is completely covered by the following red candle. Sellers overwhelmed buyers. Watch for this at resistance levels.
The Harami Pattern
Harami means "pregnant" in Japanese. It's the opposite of engulfing: the second candle is completely contained within the first candle's body.
Bullish Harami
After a big red candle, a small green candle fits inside. Sellers losing steam. Indecision entering.
Bearish Harami
After a big green candle, a small red candle fits inside. Buyers losing momentum.
Tweezer Tops and Bottoms
Two candles with the exact same (or very similar) high or low. The market hit a level, pulled back, then hit it again but couldn't go further. That's a stall signal.
Tweezer Bottom
Two candles with matching lows. Sellers tried twice to break lower, failed both times. Possible reversal up.
Tweezer Top
Two candles with matching highs. Buyers tried twice to break higher, failed both times. Possible reversal down.
Confirmation matters. Don't trade on the pattern candle itself. Wait for the next candle to confirm. If you see a bullish engulfing, wait for the candle after to close green before entering. This filters out false signals significantly.
Key Takeaways
- • A bullish engulfing: red candle followed by a larger green candle that completely covers it.
- • A bearish engulfing: green candle followed by a larger red candle that completely covers it.
- • Tweezer tops/bottoms show two candles with the same high or low: a stall signal.
- • The bigger the engulfing candle compared to the previous, the stronger the signal.