Concealing Baby Swallow

A Concealing Baby Swallow is a four-candle pattern that forms after a decline. All four candles are red: each one closed below where it opened. It is filed as a bullish reversal, even though it has no green candle in it.

The first two candles are marubozus: long red bodies with little or no shadow, the thin line above or below the body. A red marubozu opens at or near its high and closes at or near its low. Sellers ran the session from start to finish.

The third candle is the baby. It opens below candle 2's close, then rallies back up into candle 2's body before closing lower. That leaves an upper shadow. The fourth candle trades above the baby's high and below its low, a new low for the pattern, and closes below its open. It covers the baby's whole range (from its high to its low), shadows included: it swallows it, and the baby is concealed.

Four sessions: two of pure selling, one of buying, and one that hides it.

Read plainly, candle 4 is sellers winning again: a red candle that set a new low. The bullish case rests on two smaller facts. Buyers stepped in on candle 3, and candle 4 also traded above candle 3's high. Some traders read the big final red candle as the last of the selling being used up. That is a reading, not something the candles show.

It is a rare pattern. It needs two marubozus in a row, an open below the prior close, a shadow reaching back into the prior body, and a fourth candle that covers all of it. Four exact conditions seldom line up.

Bullish by name, after a decline. The name files it as a bullish reversal. The candles alone don't settle it: all four are red, and the last one set a new low for the whole pattern.

The confirmation decides. A later close above candle 1's high confirms it: price has taken back every candle in the pattern. A close below candle 4's low fails it: sellers pushed past the new low, and the decline is still running.

Most reversal patterns end with a candle in the new direction. A Hammer closes near its high; a Bullish Engulfing ends green. A Concealing Baby Swallow ends on a red candle that set a new low, in the classic picture closing near it. So the moment it completes looks bearish, and the close that proves it sits at the top of all four candles. Measure that distance before anything else, from wherever candle 4 closes.

Traders disagree on which level to use. This guide confirms on a close above candle 1's high, because only that close takes back the whole pattern. Some traders act on a close above candle 4's high instead. It comes sooner and closer to the stop, but it leaves two long red candles of selling above the entry.

Either way, the stop goes below candle 4's low. The higher the entry, the farther the stop. The stock's typical daily range is roughly what Average True Range (ATR) measures. The Candlesticks + ATR guide shows how to read it.

Three other patterns share parts of this shape. What the last candle does tells them apart.

Three Black Crows show no buying at all. Three long red candles, each closing lower, after an advance, is a bearish pattern. A Concealing Baby Swallow starts the same way, with long red candles, but after a decline, and then shows buying on candle 3, and candle 4 also trades above candle 3's high. Read the Three White Soldiers & Three Black Crows guide →

The Ladder Bottom lets the buying show. Its fourth red candle also has an upper shadow, but a fifth, green candle follows it, opening above that fourth body. In the Concealing Baby Swallow, the next red candle covers the shadow instead. Read the Ladder Bottom guide →

The Last Engulfing Bottom swallows a green candle. It is a two-candle pattern: a green candle, then a red one whose body covers it, in a decline. Here, red swallows red. Both are filed as bullish and both wait for a later close to prove it. Read the Last Engulfing guide → For engulfing candles in general, see the Engulfing Pattern guide.

The pattern says buyers showed up once, and the session after hid it. Context says whether that happened somewhere that matters.

Moving averages. Under a falling 50-day moving average, a run of long red candles reads as a downtrend doing what downtrends do. Near a rising one, after a pullback of several sessions, it reads as selling into a level the longer trend has held. Read the Candlesticks + Moving Averages guide →

Support. A swallowing candle whose low reaches a level buyers defended before, such as a prior low, puts the new low where traders were already watching. A low in empty space has no such reason behind it.

Volume. Heavy volume on candle 4 means many shares changed hands on the way to the new low. Traders read it two ways: as sellers still arriving, or as the last of them leaving. Only the later close tells you which. Read the Candlesticks + Volume guide →

A Concealing Baby Swallow is a bullish name on four red candles. Buyers show up once, on candle 3, and candle 4 swallows the evidence and makes a new low.

The lesson it teaches is to measure the proof. Find the close that confirms the pattern, candle 1's high, and measure how far it sits from the last close. Wait for it, put the stop below candle 4's low, and size the trade from that distance.