Bearish engulfing pattern

Two bars make the pattern: an up day, then a down day whose body opens above the previous close and closes below the previous open, with the red body wrapping the green one whole. Every buyer of the first session holds a loss by the end of the second. An ordinary red candle gives back some ground; this one gives back all of it and keeps going, which is why it reads as sellers taking control rather than buyers pausing.

In the middle of a range it is noise, since engulfing shapes print somewhere every session. The bar earns attention where the advance it reverses was testing something, and the bearish-engulfing-resistance scan places it at the sharpest such location: pattern is bearish_engulfing with close within 3% of the 52-week high. A visible failure while a stock probes its yearly high happens in front of the largest possible audience. Stretched momentum readings tell the same story from another angle, which is what the example query above uses.

The honest record is that plenty of these bars are absorbed within days even at the highs. Strong stocks shrug off single rejections, and an uptrend has more ways to survive one bad session than to die of it, so the pattern works better as a warning on names already held than as a standalone short signal. The replay on the scan page shows how the filtered version has resolved over 250 close-to-close sessions, costs and slippage excluded.