A bullish abandoned baby is a bullish reverse pattern, which means that it grows on the way to the conclusion of a downturn, hence a trend reversal. A gap to the downward occurs after the bearish first candle, and the bullish candle is abandoned. The second candle gaps down and becomes a Doji, whilst the last candle gaps up and closes as a positive candle.
This pattern is brought about by the pressures of stock selling shifting to stock buying. In light of psychological or fundamental considerations, investors anticipate a trend change when this occurs.
The second candle in the morning or evening star design covers the first and third candles. Also, there is no overlap between the first and third candles in the bullish pattern. This demonstrates an opening price gap. Both buyers and sellers are pushing prices. Hence, a gap develops.
How to find an abandoned baby candle?
In a downturn, this candlestick pattern potentially starts a bullish reversal pattern. Here are the three candles that combine the pattern and how to find them:
- The opening candle is a long bearish candle. It should have a long real body, representing that bears were in control of the market during that period.
- The next candle is a doji candle that gaps below the first candle. The doji candle is a neutral candle, representing indecision in the market. The gap between the two candles shows a separation in the market, representing a potential reversal.
- The 3rd candle is bullish and ends above the first candle’s centre. This represents that bulls have taken control of the market, confirming the potential reversal.
This pattern, which is quite uncommon and should be utilized in conjunction with other technical analysis tools to confirm a probable reversal, should be noted.
TABLE OF INFORMATION on Abandoned baby candlestick
| Structure | Description |
| The number of candlesticks | Three |
| Prediction | Reversal of the bullish trend |
| Prior trend | Bearish Trend |
| Counter Pattern | Bearish Abandoned baby |
Technical analysis
Technical study of this pattern can support traders’ spot probable market reversals. While trading this pattern, it is serious about holding its psychology.
The negative trend that preceded the pattern indicates that sellers had the market in their grip. When an important negative candlestick appears, it means that a critical level has been broken. This shows that the bears are losing market dominance.
Following the breakthrough, a Doji candlestick with a gap down seems to tell overrated circumstances and a breakdown in the market trend. The market is in a deadlock at the moment. It can either keep its prior tendency or reverse it.
After the Doji candlestick, a huge bullish candlestick with a gap up signals that the market has decided and buyers are now in charge. A positive trend reversal occurs when the price recovers to the critical level following a false breakthrough.
Traders frequently employ this pattern in conjunction with other technical analysis tools to look for potential market reversals. This quite unusual pattern should be used in conjunction with other technical study methods to look for potential reversals.
Best working conditions
- This pattern performs best when it forms at a support or demand zone, which signifies a probable trend reversal.
- This pattern has more strength for reversing the bullish trend in overbought conditions.
- Because this pattern is less likely to indicate a reversal under volatile market circumstances, it should not be traded.
What is the change between a bullish abandoned baby and a morning doji star pattern?
The Bullish Abandoned Baby pattern and the Morning Doji Star pattern are both bullish reversal patterns that seem in a downtrend. The following are the key variations between the two patterns:
- Unlike the Morning Doji Star, when the Doji candlestick opens closely at the same level as the preceding bearish candle, the Doji candlestick in this pattern will open and finish with a gap down.
- The Morning Doji Star has just one Doji candle, but the Bullish Abandoned Baby pattern might have many Doji candlesticks.
- Bullish abandoned baby candles and morning doji candles are bullish trend-reversal candlesticks. In forex price charts, the Bullish Abandoned Baby pattern is quite uncommon and tends to emerge in stock price charts.
In order to validate a probable reversal, these patterns should be utilized in conjunction with other technical analysis techniques because they are quite uncommon. Before entering a deal, traders should always take into account the state of the market.
Conclusion
The incredibly tight conditions make it tough to find this trade setting in forex currency pairs. Therefore, trading this candlestick pattern in stocks and indices is advised.
To seek trend reversals, it can only be employed in forex. I won’t suggest basing a trading strategy on a candlestick that has a slight possibility of appearing on the chart. However, there are a number of other advantageous applications for it, like examining trend reversal points, examining a currency pair, and adjusting stop-loss levels.
