The pattern appears on candlestick charts as two consecutive candles. The first candle has a relatively long real body in one direction, and the second candle's real body is contained within the first candle's body. The second candle is typically the opposite color, reflecting a pause in momentum and a possible shift in price direction.
Traders watch for this pattern as a potential reversal signal after a pronounced move lower. Because the second candle remains within the first's range, it suggests a loss of momentum in the prevailing direction. Practitioners often look for additional confirmation—such as a close above the first candle's high or below its low on the next session, or supportive volume, or alignment with other indicators—before acting. The pattern is most commonly noted after a sustained down move or during a corrective pullback within a larger uptrend.
Like many candlestick signals, the pattern is not guaranteed. False positives can occur in choppy markets or during sideways price action. Reliability improves when the pattern appears after a clear trend, and when confirmed by subsequent price action or other technical signals (for example, momentum oscillators or moving averages).
On a price chart, the first candle is a long red body, followed by a small green body entirely contained within the red's real body; in the next session, price closes above the first candle's high, which adds to a potential reversal assessment.
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