Relevance: Bullish
Prior Trend: Bearish
Reliability: High
Confirmation: Suggested
No. of Sticks: 3
Definition:
The Bullish Abandoned Baby Pattern is a very rare bottom reversal signal. It is composed of a Doji Star, which gaps away (including shadows) from the prior and following days’ candlesticks.
Recognition Criteria:
1. Market is characterized by downtrend.
2. We usually see a long black candlestick in the first day.
3. Then a Doji appears on the second day whose shadows gap below the previous day's lower shadow and gaps in the direction of the previous downtrend.
4. Then we see a white candlestick on the third day with a gap in the opposite direction with no overlapping shadows.
Explanation:
We have a similar scenario that is valid for most of the three-day star patterns. In a falling market, the market shows bearish strength first with a long black candlestick and opens with a gap on the second day. The second day trading is within a small range and second day closes at or very near its open. This now suggests the potential for a rally showing that positions are changed. The signal of trend reversal is given by the white third day and by well-defined upward gap.
Important Factors:
The Bullish Abandoned Baby Pattern is quite rare.
The reliability of this pattern is very high, but still a confirmation in the form of a white candlestick with a higher close or a gap-up is suggested.
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