Silver (SLV) has been on a huge run these past two months. However, yesterday just may be the turning point as a major bearish engulfing candlestick chart pattern emerged.
The bearish engulfing pattern consists of two candlesticks; the first is white and the second black. The size of the white candlestick is not that important, but should not be a doji, which would be relatively easy to engulf. The second should be a long black candlestick. The bigger it is, the more bearish the reversal. The black body must totally engulf the body of the first, white, candlestick. Ideally, the black body should engulf the shadows as well.
After an advance, the second black candlestick begins to form when residual buying pressure causes the security to open above the previous close. However, sellers step in after this opening gap up and begin to drive prices down. By the end of the session, selling becomes so intense that prices move below the previous open. The resulting candlestick engulfs the previous day’s body and creates a potential short-term reversal.
Here is the current Silver SLV chart and bearish engulfing candlestick chart pattern.