🕵️♂️ Introduction
Real examples teach best. Let’s analyze a historical BTC chart where a Bearish Engulfing candle accurately signaled a major drop.
📉 The Setup
- BTC was trading near resistance at $50,000
- On the daily chart, a Bearish Engulfing candle formed, fully engulfing the previous bullish candle
- RSI was showing overbought conditions (~75)
- Volume spiked on the bearish candle, indicating selling pressure
🚨 What Happened Next?
- Price dropped sharply over the next two weeks, losing 15%+
- Traders who recognized the pattern and confirmed with RSI exited early or shorted
- Those ignoring the signal faced losses
✅ Lessons Learned
- Bearish Engulfing near resistance is a strong reversal warning
- Confirm with momentum indicators and volume
- Always wait for candle close for confirmation