Relevance: Bearish
Prior Trend: Bullish
Reliability: High
Confirmation: Suggested
No. of Sticks: 3
Definition:
The Bearish Abandoned Baby Pattern is a very rare top reversal signal. It is basically composed of a Doji Star, which shows gaps (including shadows) from the prior and following sessions’ candlesticks.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see a long white candlestick in the first day.
3. Then we see a doji on the second day whose shadows characteristically gap above the previous day's upper shadow and also gaps in the direction of the previous uptrend.
4. Finally we see a black candlestick characterized with a gap in the opposite direction, with no overlapping shadows.
Explanation:
Most of the three-day star patterns have similar scenarios. In an uptrend, the market seems still strong displaying a long white candlestick and opening with a gap on the second day. The trading in second day is within a small range and its closing price is equal or very near to its opening price. Now there is a sign of sale-off potential with reversal of positions. The trend reversal is confirmed by the black candlestick on the third day. Downward gap also supports the reversal.
Important Factors:
The Bearish Abandoned Baby Pattern is quite rare.
The reliability of this pattern is very high, but still a confirmation in the form of a black candlestick with a lower close or a gap-down is suggested.
No comments:
Post a Comment