Abandoned Baby Candlestick Pattern

Abandoned baby is a rare but reliable candlestick pattern which indicates a trend reversal. This is a three candlestick pattern formed of three different candlesticks, a bearish candlestick, a bullish candlestick and a doji candlestick; the shadow of doji candlestick is gapped away from other two. There are two types of abandoned baby candlestick patters, bullish abandoned baby candlestick pattern and bearish abandoned baby candlestick pattern.

Bullish abandoned baby candlestick formation occurs after a significant downtrend and indicates the beginning of an uptrend. On first day there is a black (colored/bearish) candlestick maintaining the bearish trend. On second day there is a doji star which gap bottom to first day candlestick indicating high uncertainty in market. On third day there is a white (colorless/bullish) candlestick indicating the beginning of an uptrend.

Bearish abandoned baby candlestick formation occurs after a significant uptrend and it indicates the beginning of a downtrend. First day is a bullish day characterized by a colorless candlestick. On second day there is a doji star which gap above to the first day candlestick indicating high uncertainty. Third day is a bearish day characterized by a colored candlestick which indicates the beginning of a downtrend.

Abandoned baby candlestick patters are considered as a highly reliable trading pattern. Reliability increases with increase in gapping and trading volume. Confirmation is suggested, which can be bullish (for bullish abandoned baby) or bearish (for bearish abandoned baby) candlestick on fourth day.

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