Last Engulfing Top
Last Engulfing Top: How to Identify and Trade This Bearish Reversal Pattern (Stocks, Forex & Crypto)
Imagine spotting a market reversal before it happens—saving your portfolio from a sudden downturn. The Last Engulfing Top candlestick pattern gives traders exactly that power. Whether you’re day trading Bitcoin, swing trading NASDAQ stocks, or analyzing forex pairs, mastering this pattern could be your key to avoiding losses and capitalizing on bearish trends.
🚀 Free Download: Candlestick Pattern Cheat Sheet
Grab your 10-pattern cheat sheet to master the Last Engulfing Top and other high-probability setups:
What is the Last Engulfing Top?
The Last Engulfing Top is a two-candle bearish reversal pattern that signals exhaustion in an uptrend. Here’s how it works:
- 📈 Candle 1: Small bullish candle (buyers in control)
- 📉 Candle 2: Larger bearish candle that “engulfs” the prior candle’s body (sellers take over)
Market Psychology: This pattern reflects a sudden shift from greed (buyers) to fear (sellers), often appearing at resistance levels or after overextended rallies.
How to Identify the Last Engulfing Top
Key Identification Rules
- ✅ Forms during a clear uptrend (stocks, forex, or crypto)
- ✅ Bearish candle closes BELOW the prior candle’s open
- ❌ Invalid in sideways or choppy markets
Real-World Example
“In May 2023, Tesla (TSLA) rallied to $180 before forming a Last Engulfing Top. The next day’s bearish engulfing candle triggered a 15% drop over the following week.”
Trading Strategies for the Last Engulfing Top
Confirmation Signals
- 🔍 Wait for a third candle closing below the engulfing candle’s low
- 📊 Validate with:
- High trading volume (sellers committing)
- RSI divergence (overbought conditions)
Entry & Exit Tactics
- ⚡ Short Entry: After confirmation candle closes
- ⛔ Stop-Loss: Above the engulfing candle’s high
- 🎯 Profit Target: Nearest support level (e.g., Fibonacci 61.8% retracement)
Common Mistakes to Avoid
- ⚠️ Trading the pattern without trend context
- ⚠️ Ignoring volume (low volume = weak signal)
- ⚠️ Overlooking confirmation (jumping in too early)
Tools to Enhance Accuracy
- 💻 TradingView Pro: Advanced candlestick scanning
- 📈 ChartPrime: Real-time crypto volume analysis
- 🔔 VIP Indicators: Automated pattern alerts
Final Thoughts
The Last Engulfing Top isn’t just another candlestick—it’s a warning sign of impending bearish momentum. Combine it with volume analysis and key support/resistance levels to trade with sharper precision. Don’t forget to download your free cheat sheet and turn this pattern into consistent profits!
Get Your Free Download!
- Easy access to over 20+ essential candlestick patterns for all trading scenarios.
- Confidence in spotting high-probability trade setups by reading key reversal and continuation signals.
- PLUS... Six printable analyzing charts to help you make better trades.
Leave a Reply