Definition
Bullish Concealing Baby Swallow includes two consecutive Marubozu Black candles. The body of the second candle overlaps the body of the previous candle, but the trend is still decreasing. The Marubozu Black on the third day reflects a selling pressure and closes at a new minimum. It may motivate traders to open short positions, but it is a trend reversal pattern.
- Trend: Reversal
- Expected trend: Bullish
- Previous trend: Bearish
- Reliability: Moderate
- Type: Bullish
- Number: 4
Recognition
- The market is in a downward trend.
- The first two days are Marubozu Blacks.
- The third day is a black candle with a downward gap. There is some overlapping with the previous day’s trading range, drawing a long upper shadow.
- The fourth day is another Marubozu Black, totally covering the third day’s trading range (including the shadow).
Interpretation
The first two days are Marubozu Blacks in the inclining trend, reflecting a selling pressure. The third day starts with a downward gap. There is some overlapping with the previous day’s trading range, but the share closes at a new minimum. The volume is usually the highest on this day. The fourth day is another Marubozu Black because the market participants got rid of their long positions. The share closes at a new minimum. This pattern brings an important signal. A white candle after the formation can confirm the reversal. The closing price must be above the middle of the last Marubozu candle’s body.
Important factors
The formation is moderately reliable, but a confirmation is necessary (may come from a white candle with higher closing price or gap).
