Tutorial on Abandoned Baby Bearish Candlestick Pattern

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Tutorial on Abandoned Baby Bearish Candlestick Pattern

Abandoned Baby Bearish is a trend reversal candlestick pattern which forms at the uptrend. This candlestick is considered to be one of the most reliable candlestick patterns. This bearish pattern gives a clear picture of price movement in the market. When this pattern forms at an uptrend or at possible resistance level, then there is a high potential possibility that price will fall down. To form this pattern it takes three candles.

How to identify the Abandoned Baby Bearish Candlestick Pattern?

First Candlestick: On candle 1, a large bullish candlestick is formed, representing the further continuation of an uptrend.

Second Candlestick: On candle 2, a Doji is formed which gaps up from the first candlestick.

Third Candlestick: On candle 3, a large bearish candlestick is formed which gaps down from the Doji formed on candle 2. It opens below the close of candle 2 Doji and closes at least near the center or midpoint of the first candlestick (Bearish candlestick).

Points to Consider before Trading with Abandoned Baby Bearish Candlestick Pattern

This pattern should be formed at the Uptrend or possible resistance level.

The larger bullish candlestick formed on the first candle shows that the market is strongly under the control of the bulls. As the Doji with the gap up has formed on the second candle, it indicates that the market is still in an upward trend. The formation of a long bearish candlestick on the third candlestick confirms the pattern and shows that the bears are taking over the bulls. If the third candlestick opens with a gap down and closes below or at least near the midpoint of the first candlestick, it indicates a strong trend reversal and a sell signal.

The abandoned baby bearish pattern occurs at high prices after an uptrend and indicates a future downtrend. This pattern shows that there is a possibility that the market will go into a downtrend. This pattern is rare to be formed. Though it is easy to pick this pattern, if done correctly one can easily catch the trend reversal/sell signal, and it's highly rewarding.

Even though abandoned baby bearish is one of the reliable candlestick patterns it is important to reconfirm the pattern by integrating it with the other technical indicators. Therefore adding any one of the other indicators like volume, Stochastic (RSI), RSI, Bollinger Band, etc. with candlestick patterns, can give more accurate results.

Traders can put 1:2 risk:reward ratio.

Trading with Abandoned Baby Bearish Candlestick Pattern

When abandoned baby bearish candlestick pattern formed at uptrend, then traders can take a short position. Abandoned baby bearish is considered a highly reliable pattern, which consists of three candles. Third candle of this pattern which forms after the doji candle indicates that the trend is now bearish, & if this candle appears with high volume then it makes this pattern more reliable. Aggressive traders can enter immediately after the formation of the pattern & conservative traders should wait for the next candle, that should cross below the closing price of Abandoned baby bearish third candle. Traders can put stop loss at the high price of the abandoned baby bearish second candle (doji).

Advantages & Disadvantages of Abandoned Baby Bearish Candlestick Pattern

Advantages of Abandoned Baby Bearish Pattern

Abandoned baby bearish is one of the most reliable candlestick patterns.
Abandoned Baby Bearish candlestick pattern provides a clear noticeable signal for a potential trend reversal.
An excellent trading strategy for scalpers and swing traders which may benefit from gap trading and a Doji candlestick pattern.

Disadvantages of Abandoned Baby Bearish Pattern

Rare to find on trading charts, particularly on longer period / time frames like EOD, weekly, monthly ticks.
The abandoned baby bearish candlestick pattern sometimes it can be considered as invalid by some traders if it does not take the price lower than the half body of the first candle.

Simple Abandoned Baby Bearish Screeners are available in public view for free while more comprehensive screeners are available to premium customers.