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To evaluate the performance of the pattern in your stock exchange within the context of other global markets, please refer to the table below. Locate your stock market to see its ranking among others. This will provide insights into the pattern’s strength and reliability, aiding you in your buying and selling decisions.
BULLISH ABANDONED BABY
Definition
This is a three-candlestick pattern indicating a major bottom reversal. It is similar to the Bullish Morning Doji Star with one important distinction: the shadows on the Doji must also gap below the shadows of the first and third days. The name comes from the second day of the pattern, which appears isolated on the chart like an abandoned baby. The pattern consists of a black candlestick followed by a Doji that gaps away from the prior black candlestick and a subsequent white candlestick whose closing is well into the first black body.
Recognition Criteria
1. The market is currently defined by a dominant downward trend.
2. We see a black candlestick on the first day.
3. Then we see a Doji on the second day whose shadows gap below the previous day’s lower shadow.
4. Third day’s white candlestick gaps in the opposite direction with no shadows overlapping.
Pattern Requirements and Flexibility
The Bullish Abandoned Baby pattern begins with a black candlestick that is not short. It continues with a Doji that gaps from the prior candlestick, including its shadows. The third day features a white candlestick. Any gap between the low of this candlestick and the high of the Doji may be ignored. The white candlestick must close well within the range of the initial black candlestick. The extent of how high this candlestick must close is determined according to the other candlesticks in the pattern. Ideally, the third day’s closing price should reach at least the midpoint between the first day’s opening price and the second day’s lowest point.
Trader’s Behavior
A black candlestick confirms the continuation of the downtrend. The appearance of a Doji with a significant gap down suggests that bearish pressure remains strong. The narrow price action between the Doji’s open and close signifies market indecision and the weakening of the downtrend. On the third day, the white candlestick closes above the previous day’s range, attempting to recover some losses from the downtrend.
Buy/Stop-Loss Levels
The confirmation level is set at the last closing price. For confirmation, prices need to surpass this level.
The stop-loss level is set at the lower of the last two lows. After a BUY signal, the stop-loss is triggered if prices decline instead of rising and either close below the stop-loss level or record two consecutive daily lows below it, without any bearish pattern being detected.