The bearish engulfing candlesticks pattern signals with high probability, a bearish reversal. In order to be reliable, an uptrend must be in place. Below follows its graphical representation.

The red candlestick opens with a gap up but in the end it closes below the open of the previous green candlestick. So we can say that the red engulfs the green one. This is a sign that after a price advance sellers are taking control. Notice that this pattern resembles to the dark cloud cover, the only difference is that the red closes below the open of the green instead of closing below its midpoint.

Trade set up using bearish engulfing

In SBUX daily chart we have a bearish engulfing in the circled area. In order to open a short position, the pattern must be formed on an already existing resistance. The possibility of success is augmented if the market has also formed a bearish candlestick pattern on a resistance level or even better being simultaneously in a midterm downtrend.