A Bullish Engulfing Pattern is a Candlestick Pattern and occurs when a negative candle with a relatively small body is followed by a positive candle with a larger body. It is important that the body of the second candle fully encompasses the body of the first candle. Ideally, the second candle has no or only a very small wick at the top. This combination tells us a number of things:
A Bullish Engulfing Pattern is a reversal pattern. It is an indication that the current existing downward trend (short or long term) is coming to an end and a positive trend reversal is imminent. The Bearish Engulfing Pattern is the counterpart of the Bullish Engulfing Pattern.
In mid-February 2020, NCR breaks down and we see a clear downtrend lasting about a month. In mid-May, about a month later, the trading session ends with a doji-candle (candle 1 of our pattern). The next day (candle 2) the price initially opens a little lower than the closing price of the previous day but eventually the buyers enter the market and push the price up with a closing price significantly above the first candle. The upper wick of the second candle of the bullish engulfing pattern is short and shows that the closing price is close to the highest price of the day. As a result, the decline was halted and a new (interim) uptrend occurred.
BUY STOP LIMIT (entry) - a few cents higher than the highest price of the second candle forming the engulfing pattern.
STOPLOSS (exit at market price) - either just below the lowest price of the second candle, or below the lowest price of the first candle forming the bullish engulfing pattern.
An example setup can be found on the chart below:
Not every bullish or bearish engulfing pattern will be successful! Good risk and trade management is at least as important to be successful in the long term. A few things you can consider to increase your success rate:
Filtering stocks based on candlestick patterns can be done in the stock screening section under the tab indicators. You'll not only find the engulfing pattern there, but also numerous other popular candlestick patterns.