Bullish Abandoned Baby
A downtrend’s reversal is indicated by the bullish abandoned baby candlestick pattern traders use. It is made up of three price bars and forms during a decline. A Doji candle that spans below the first candle comes after the first, a sizable down candle. The following candle rises quickly upward after opening higher than the Doji.
Key Takeaways Regarding Bullish Abandoned Baby
- The Bullish Abandoned Baby is sometimes used as a strong indicator for trend reversal.
- The pattern is formed of three main candles and performs as an indicator for an ongoing bearish trend overall.
- The Bullish Abandoned Baby basically consists of a big bearish candle followed by a Doji, and later on with a strong bullish big candlestick/bar.
What does the Bullish Abandoned Baby Pattern look like?
Some of the conditions that are worth looking forward to are as follows:
- As shown in the above image, the first candlestick is a bearish candle, i.e. the downtrend candlestick.
- The second candle formed is a Doji, and can be considered an important factor in the reversal pattern.
- The third candle should be a bullish candle, which forms a better indication of a reversal candlestick.
For a clear indication, the wicks should not be overlapping other candles, i.e. the open and close prices of these candles should not be overlapping each other.
One of the main reasons that a bullish abandoned baby forms are due to an ongoing downtrend and coming across with an upward trend or reversal.
The pattern emerges because the dynamics of stock trading are moving from selling to buying. This can occur when investors anticipate a trend reversal due to underlying or psychological factors.
How to make better entries in a bullish trend reversal?
As I have just mentioned earlier that an abandoned baby can be an excellent thing to look into overall. There can be a lot of factors including bullish trends that can help in making a lot better entries while you get into trading. Before entering a trade, working on your trade includes a number of indications that can help you in getting along with a better probability of winning a trade. For example, here are some of the indications that can be used by you.
- Support and Resistance (Important from a Technical analysis point)
- Try to work on Fundamental analysis if you seek to take intraday or swing trades as it can be helpful in the long run.
- Look out for more reasons, the indications that you use as per your trading strategy and style.
- Always put a stop-loss for all the trades you get along with. A Proper Stop loss and Take Profit can help you in making things even better for trading and improvising as time passes.
Some traders use a stop-limit order to enter the trade on a break above the third bar in the pattern. Given that it is anticipated that the price will rise further, a move above the high of the third bar could present a buying opportunity.
You might encounter a number of abandoned baby examples, one of which is shown above. If we consider the different patterns, you might encounter different forms of abandoned baby patterns, sometimes you might encounter a gap, or sometimes you might encounter the pattern under different time frames.
There are two types of abandoned baby patterns- bullish and bearish. These patterns are similar to evening star and morning star formations. The key difference that makes abandoned baby patterns rare is the presence of a Doji candle in the middle with gaps on either side. Evening star and morning star formations do not need the middle candle to be a Doji, nor do they require gaps on either side.
