Bearish Engulfing Pattern: The Candles at Adobe's 2021 Record High and Oracle's 2025 Top

On November 22, 2021, at Adobe's record high, the stock printed a bearish engulfing. Sold at that close with a stop above its high, the trade risked 3.9%. By May 9, 2022 the stock was down 44.0%.

On September 11, 2025, the day after Oracle jumped 35.9% on its earnings report, Oracle printed one at its own record high. The risk was 12.3%. By February 5, 2026 the stock was down 55.7%.

Neither stock has traded above its engulfing's high since. Here is how to read a bearish engulfing, where the stop goes, and how to find the next one.

What the fall cost#

A bearish engulfing is a sell signal for holders and an entry for short sellers. Held through the fall, $10,000 of either stock lost about half its value.

Prices are split-adjusted, as on the chart.

The bearish engulfing in one table#

A bearish engulfing is two daily candles: a green day, then a red day whose body opens at or above the green close and closes at or below the green open. Buyers had the first day. Sellers took all of it back on the second, and more. It is the bullish engulfing turned upside down, at a top instead of a bottom.

These are the rules the VCP Scanner terminal uses to name a bearish engulfing on a daily chart.

Only the bodies have to engulf. The first day can be small: Adobe's green day below had a 7.11 body and Oracle's a 9.14 body, and each red day swallowed it whole.

The position rule matters most. A bearish engulfing comes after a rally. At the bottom of a decline, the mirror image (a red day swallowed by a green one) is a bullish engulfing.

Bearish engulfing and its look-alikes#

The dark cloud cover is the near miss: its red day opens above the green close but closes between the green body's midpoint and its open. Reach the open and it becomes an engulfing. On a single candle, the same message at a top is the shooting star.

Example 1: Adobe (ADBE) at its 2021 record high, Nov 22, 2021#

Open ADBE in the VCP Scanner terminal →

The two highs were 4 cents apart, which also makes the pair a tweezer top.

What followed:

• Next session (Nov 23): closed at 665.16, −1.2% and already below the pattern's low of 672.66.
• Ten sessions later (Dec 7): 649.96, −3.5%.
• Twenty sessions later (Dec 21): 557.52, −17.2%.
• Feb 17, 2022: 457.71, −32.0%.
• May 9, 2022: 376.91, −44.0%. That is 11.4 times the 25.97 risked on each share.
• The high of 699.54 was never taken out. The highest price since is 694.89. On Nov 3, 2026 Adobe closed at 246.14, 63.5% below the engulfing's close.

With $500 at risk, the stop sized a short at 19 shares, about $12,798. At the May 9, 2022 close the short was up $5,637.

Example 2: Oracle (ORCL) at its 2025 record high, Sep 11, 2025#

Open ORCL in the VCP Scanner terminal →

What followed:

• Next session (Sep 12): closed at 292.18, −5.1% and below the pattern's low of 304.60.
• Ten sessions later (Sep 25): 291.33, −5.4%.
• Twenty sessions later (Oct 9): 296.96, −3.5%.
• Nov 25: 197.03, −36.0%.
• Feb 5, 2026: 136.48, −55.7%. That is 4.5 times the 37.86 risked on each share.
• The high of 345.72 was never taken out. The highest price since is 329.50. On Nov 3, 2026 Oracle closed at 126.21, 59.0% below the engulfing's close.

The stop is wide because day 1's high sits at the top of the earnings spike. A wide stop buys fewer shares for the same risk: with $500 at risk, the stop sized a short at 13 shares, about $4,002. At the Feb 5, 2026 close the short was up $2,228.

Where a bearish engulfing counts: key levels#

A bearish engulfing on a level is a test of that level from below. In the terminal, the Only at a key level switch is on by default and keeps the engulfings that close back below one of these:

Adobe's and Oracle's engulfings both set records, so there was no earlier high to poke, and they sat on none of these levels. To see engulfings like these, turn Only at a key level off.

Both stocks were in Stage 2, Stan Weinstein's advancing stage: the stock trades above a rising 30-week average. A bearish engulfing in Stage 2 marks a top inside an uptrend, a place to take profits or tighten a stop as much as a place to short.

How to trade a bearish engulfing#

1. Find the high. A bearish engulfing comes after a rally. Look for it at a prior high, a failed breakout's pivot, a falling average or a fresh record, like Adobe's in 2021 and Oracle's in 2025.
2. Check the bodies. The red body must cover the green one. Adobe's 22.70 red body swallowed a 7.11 green one. Oracle's 22.48 swallowed 9.14.
3. Choose your entry. Holders sell or tighten their stop at the engulfing's close, and some short sellers enter there. Others wait for a close below its low. Adobe and Oracle both gave that close the very next session.
4. Put the stop above the high. Above the higher of the two highs, or above the highest high of the test if price went higher earlier in it. The terminal calls this "the high, test included".
5. Size from the stop. Shares = money at risk ÷ (stop − entry). With $500 at risk on Oracle: 500 ÷ (345.72 − 307.86) = 13 shares.

Find bearish engulfings on any chart in VCP Scanner#

• Open a stock in the terminal, for example ADBE or ORCL.
• Open Candles in the chart toolbar and tick Bearish engulfing, or use the Bearish quick pick for every bearish candle on the chart.
• Only at a key level is on by default. Turn it off to see every bearish engulfing on the chart.
• The chart jumps to the latest bearish engulfing. A dot marks each one above its high, and the selected one shows its stop on the price scale.
• The inspector lists the close, stop, risk to stop, level, volume and stage. Walk through the others with the ← and → keys.
• Mark the ones you care about with the drawing tools. The arrows in the charts above are the Arrow Marker (Alt+A): click where the arrow starts, then click the candle.

Candles are free, on daily, weekly and monthly charts.

Bottom line#

• A bearish engulfing is a green day swallowed by a red one after a rally: buyers had the first day, and sellers took all of it back on the second.
• Adobe's marked its 2021 record high and Oracle's its 2025 top. They risked 3.9% and 12.3%, and the stocks fell 44.0% and 55.7% within 120 sessions.
• The pattern's high is the stop. It defines your risk before you take the trade.

Data: VCPScanner daily market data through Nov 3, 2026, split-adjusted. The examples are for education, not recommendations.