Bullish Engulfing Pattern: The Candles at Tesla's 2023 Bottom and Arm's 2026 Low

On January 6, 2023, 74% below its January 2022 high, Tesla printed a bullish engulfing. Bought at that close with a stop under its low, the trade risked 10.0%. By June 20 the stock was up 143%.

On February 5, 2026, the session after its earnings report, Arm printed one at a prior low. The risk was 9.8%. By June 18 the stock was up 296%.

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

What $10,000 became#

Prices are split-adjusted, as on the chart.

The bullish engulfing in one table#

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

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

Only the bodies have to engulf. The first day can be tiny: Tesla's red day below had a 0.17 body and Arm's a 0.10 body, and each green day swallowed it whole.

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

Bullish engulfing and its look-alikes#

The piercing line is the near miss: its green day opens below the red close but closes between the red body's midpoint and its open. Reach the open and it becomes an engulfing.

Example 1: Tesla (TSLA) at its 2023 bottom, Jan 6, 2023#

Open TSLA in the VCP Scanner terminal →

What followed:

• Next session (Jan 9): closed at 119.77, up 5.9% and already above the pattern's high of 114.39.
• Ten sessions later (Jan 23): 143.75, +27.1%.
• Feb 15: 214.24, +89.5%.
• Jun 20: 274.45, +142.7%. That is 14.3 times the 11.25 risked on each share.
• The low of 101.81 was never broken. Tesla's lowest price since that day is 114.92, above even the pattern's high. On Nov 3, 2026 Tesla closed at 398.50, 252.5% above the engulfing's close.

With $500 at risk, the stop sized the trade at 44 shares, about $4,975. At the Jun 20, 2023 close those shares were up $7,101.

Example 2: Arm (ARM) at a prior low, Feb 5, 2026#

Open ARM in the VCP Scanner terminal →

What followed:

• Next session (Feb 6): closed at 123.70, +11.6% and above the pattern's high of 115.10.
• Ten sessions later (Feb 20): 125.58, +13.3%.
• Apr 24: 234.81, +111.8%.
• Jun 18: 439.46, +296.3%. That is 30.3 times the 10.86 risked on each share.
• The low of 100.02 was never broken. Arm's lowest price since that day is 111.26, above the engulfing's close. On Nov 3, 2026 Arm closed at 202.49, 82.6% above the engulfing's close.

With $500 at risk, the stop sized the trade at 46 shares, about $5,100. At the Jun 18, 2026 close those shares were up $15,115.

Where a bullish engulfing counts: key levels#

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

Arm's engulfing was a prior-low engulfing: it undercut the January 14 low and closed back above it, so it shows with the default switch. Tesla's came at a fresh three-month low, on none of these levels. To see engulfings like that one, turn Only at a key level off.

Stage 2 is Stan Weinstein's advancing stage: the stock trades above a rising 30-week average.

How to trade a bullish engulfing#

1. Find the low. A bullish engulfing comes after a decline. Look for it at a prior low, a rising average or a fresh multi-month low, like Arm's in 2026 and Tesla's in 2023.
2. Check the bodies. The green body must cover the red one. Tesla's 10.06 green body swallowed a 0.17 red one. Arm's 6.40 swallowed 0.10.
3. Choose your entry. Some traders buy the engulfing's close. Others wait for a close above its high. Tesla and Arm both gave that close the very next session.
4. Put the stop under the low. Under the lower of the two lows, or under the lowest low of the test if price went lower earlier in it. The terminal calls this "the low, test included".
5. Size from the stop. Shares = money at risk ÷ (entry − stop). With $500 at risk on Arm: 500 ÷ (110.88 − 100.02) = 46 shares.

Find bullish engulfings on any chart in VCP Scanner#

• Open a stock in the terminal, for example TSLA or ARM.
• Open Candles in the chart toolbar and tick Bullish engulfing, or use the Reversals quick pick for every classic reversal candle.
• Only at a key level is on by default. Turn it off to see every bullish engulfing on the chart.
• The chart jumps to the latest bullish engulfing. A dot marks each one under its low, 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 bullish engulfing is a red day swallowed by a green one after a decline: sellers had the first day, and buyers took all of it back on the second.
• Tesla's marked its 2023 bottom and Arm's its February 2026 low. They risked 10.0% and 9.8%, and the stocks rose 143% and 296% within six months.
• The pattern's low 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.