The Concealing Baby Swallow is a four-line candlestick pattern that occurs at the end of downtrends. It is an early sign that the downtrend is deteriorating. The theory behind this pattern is that the bulls respond quickly to two bearish candles during a downtrend.
In This Article
What is the Concealing Baby Swallow?
How To Analyse Chart Using The Concealing Baby Swallow
Category
Trend
Type
Lagging
It is a bullish reversal signal that occurs at the end of downtrends. It comprises four candlesticks. The first candle is a Marubozu which appears during a trend, while the second is the same colour as the first one.
The latter opens up within the body of the prior and closes out of the previous closing price. On the other hand, the third one is a high wave without a lower shadow. The four and last one must engulf the shadow and body of the previous candle.
While the Concealing Baby Swallow pattern is one of the most reliable indicators, it’s essential to confirm this pattern correctly.
The first two days of this trend are Marubozu Blacks in the inclining trend. These reflect selling pressure and control of the bears in the market. However, the third candlestick creates a downtrend gap. While this candlestick closes near the second one, the prices close at a new low.
The volume remains exceedingly high during this day. After that, the fourth candlestick opens higher.
In order to buy a stock using a formation, traders need to identify a close above the upper body of the fourth candlestick. If you want to place a stop-loss, do it in the area below this candlestick.