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To see the performance of the pattern in your stock exchange in the context of other stock markets please examine the table below. Find your stock market there and see how it ranks among the others. This will give you an idea about the pattern’s strength and reliability and help you in your selling decisions.
BEARISH ABANDONED BABY
Definition
This is a three-candlestick pattern signaling a major top reversal. It is exactly the same as the Bearish Evening Doji Star with one important difference. The shadows on the Doji must also gap above the shadows of the first and third days. Its name comes from the second day of the pattern, which floats out on the chart by itself like an abandoned baby of the first and third days. Basically, the pattern consists of a white candlestick followed by a Doji that gaps away (including shadows) from the prior white candlestick and the following black candlestick whose closing is well into the first white body.
Recognition Criteria
1. The market is characterized by a prevailing uptrend.
2. A white candlestick is observed on the first day.
3. Then we see a Doji on the second day whose shadows gap above the previous day’s upper shadow.
4. Third day’s black candlestick gaps in the opposite direction with no shadows overlapping.
Pattern Requirements and Flexibility
The Bearish Abandoned Baby should start with a white candlestick that is not short, and it must continue with a Doji accompanied by a gap away from the prior candlestick (including shadows). The third day of the pattern is a black candlestick. The gap between the high of this candlestick and the low of the Doji may be null. The black candlestick must close well into the white candlestick that appears at the beginning of the pattern. The extent of how low this candlestick must close is defined according to the other candlesticks belonging to the pattern. The third day’s closing must reach the midpoint between the first day’s opening and the second day’s highest body level.
Trader’s Behavior
A white candlestick confirms the continuation of the uptrend that is in progress. The appearance of the Doji accompanied by a huge gap indicates that the bulls are still pushing up the price. However, the tight price action between the open and close shows indecision and reflects deterioration in the prior trend. On the third day, prices gap lower on the open and then close much lower. Bears have taken control of the market.
Sell/Stop Loss Levels
The confirmation level is defined as the last close. Prices should cross below this level for confirmation.
The stop loss level is defined as the higher of the last two highs. Following the bearish signal, if prices go up instead of going down, and close or make two consecutive daily highs above the stop loss level, while no bullish pattern is detected, then the stop loss is triggered.