- Sentiment: Bullish
- No. of candles: 3
- Direction: Reversal
What Is The Bullish Abandoned Baby Japanese Candlestick Pattern?
The Bullish Abandoned Baby pattern is a bullish reversal pattern that typically forms after a downtrend or during a period of market consolidation.
The Japanese candlestick pattern consists of three candles. The first candle is a long bearish candle, indicating strong selling pressure.
The second candle is a small-bodied candle, also known as a Doji, which gaps down from the first candle, signifying indecision and a potential weakening of the bearish momentum.
The third candle is a long bullish candle that gaps up from the Doji and closes higher, indicating strong buying pressure and a potential trend reversal.
What Is The Psychology Behind The Bullish Abandoned Baby Pattern?
The Bullish Abandoned Baby pattern reflects a shift in market sentiment from bearish to bullish. Initially, the bears are in control, pushing the price lower with a long bearish candle.
The appearance of the Doji suggests that selling pressure is decreasing, and the market is indecisive.
The long bullish candle that follows signals that buyers have regained control and are driving prices higher, which may lead to a bullish trend reversal.
Japanese Candlestick Charting Techniques, Second Edition
71% OffHow To Trade The Bullish Abandoned Baby Reversal Pattern?
To trade the Bullish Abandoned Baby pattern, wait for confirmation by the third candle.
The buy trigger occurs when the third bullish candle closes above the high of the Doji, confirming the pattern.
Place a stop loss order below the low of the Doji to protect against potential false breakouts or a sudden reversal.
As the price moves in your favor, you can use trailing stops or other risk management techniques to lock in profits and minimize potential losses.
Additional Tips
While the Bullish Abandoned Baby pattern can be a powerful reversal signal, it is important to use it in conjunction with other technical indicators and chart patterns to confirm the trend change.
Additionally, be aware of the overall market context and consider factors such as support and resistance levels, as well as the strength of the prevailing trend.
Keep in mind that the occurrence of this pattern is relatively rare, and proper risk management is always necessary.
Continue to learn about Japanese candlesticks through books, such as Steve Nison’s “Japanese Candlestick Charting Techniques” and “Beyond Candlesticks.”