The Abandoned Baby is a reversal Japanese candlestick pattern that is formed by three candles: one doji and two candles with bodies.
Before and after the doji, there is a gap.
The shadows on the doji must completely gap below or above the shadows of the first and third candle.
There are two types of Abandoned Baby:
- Bullish Abandoned Baby
- Bearish Abandoned Baby
The Abandoned Baby pattern is fairly rare as the price movements need to meet specific criteria in order to create the pattern.
To identify an Abandoned Baby pattern, look for the following criteria:
Bullish Abandoned Baby
- There must be a large black (or red) candlestick in a downtrend.
- The black candle must be followed by a Doji that gaps below the close of the first candle.
- The last candle in the three-candlestick pattern must be white (or green) and open above the Doji.
Bearish Abandoned Baby
- There must be a large white (or green) candlestick in an uptrend.
- The white candle must be followed by a doji that gaps above the close of the first candle.
- The last candle in the three-candlestick pattern must be black (or red) and open below the doji.
It is very important that there are gaps between the first and second candles as well as the second and third candles.
Neighboring candles must NOT overlap.
If they do overlap, it is considered a Morning Star or Evening Star candlestick pattern.
The Abandoned Baby is a reversal pattern.
After a solid uptrend or downtrend, there is a pause, a moment of uncertainty (depicted by the doji).
Then, the momentum suddenly shifts.
If there had been an uptrend previously, the bears take control and push the price downward.
If there had been a downtrend previously, the bulls take control and push the price upward.
This rapid shift signals a strong reversal.
The larger the gaps, the greater the reversal.
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