Bullish Abandoned Baby Candlestick – Strong Reversal Pattern

When a bearish trend reversal seems relentless, traders look for signs of a shift. The Bullish Abandoned Baby candlestick pattern is one such signal that suggests a potential transition from a bearish trend to a bullish trend.

Recognizing this reversal candlestick pattern early can help traders anticipate price rebounds and position themselves accordingly.

This guide explains how the Bullish Abandoned Baby works, what it reveals about trading psychology, and how traders can use it effectively while managing risk.

The Bullish Abandoned Baby is a 3-candle pattern that signals a potential shift from a downtrend to an uptrend. It is characterized by a sequence of:

• A strong, bearish candle pattern that continues the existing bearish trend.
• A Doji candlestick that gaps down. This pattern indicates hesitation or indecision in stock trading.
• A strong bullish pattern that gaps up and closes above the second candle’s midpoint.

This pattern in technical analysis suggests that sellers are losing momentum, and buyers are stepping in to take control. The gap between the Doji candlestick and the surrounding candlestick chart pattern reinforces the idea of a sudden shift in sentiment.

The Bullish Abandoned Baby candlestick pattern is illustrated below.

• Appears at the end of a bearish trend reversal, signaling a potential shift opposite to the bearish abandoned baby candlestick pattern. 
• Consists of three candles: a large bearish abandoned baby pattern, a Doji candlestick that gaps down, and a large bullish pattern that gaps up.
• The gaps increase reliability by reinforcing the shift in sentiment.
• The final bearish to bullish pattern must close above the midpoint of the first candle pattern.
• Works best when confirmed with higher trading volume.

This reversal candlestick represents a clear transition in market sentiment.

• The first candle pattern shows continued selling pressure, reinforcing the existing bearish trend.
• The Doji candle (second candle), with a gap down, reflects indecision—buyers and sellers reach an equilibrium, showing hesitation.
• The final bullish reversal candle gaps up and closes higher, confirming that buyers have taken control.
• The gaps on both sides of the Doji candlestick are a technical analysis a strong shift in momentum, making this pattern more reliable than many other reversal candlestick patterns.

Market Conditions

The Bullish Abandoned Baby candlestick pattern is most effective in strong bearish trends where selling pressure has been dominant. If it forms near a key support level, its reliability improves.

Volatility Considerations

• In high-volatility markets, gaps may be larger, and false signals can occur.
• In low-volatility markets, the pattern can be more reliable, but price movements may be slower.
• Confirmation with volume and follow-through price action is crucial before taking a position.

• Stop-loss placement: Below the low of the Doji candlestick to protect against false breakouts.
• Entry strategy: Traders often enter after the final bullish to bearish pattern confirms the reversal.
• Profit target: Use previous resistance levels or a risk-reward ratio (e.g., 2:1) for exit planning.

• The final bullish pattern fails to close above the first candle pattern’s midpoint: This weakens the signal.
• No gap between the Doji candlestick and the other candles: Gaps are crucial for validity.
• Strong selling pressure returns after the pattern forms: If the price starts dropping again, the reversal may be invalid.

To trade the Bullish Abandoned Baby systematically:

1. Identify a strong bearish trend before the pattern forms.
2. Detect a large bearish abandoned baby candlestick, followed by a Doji candlestick with a gap down and a final bullish pattern with a gap up.
3. Require confirmation: Enter long only if the final bullish pattern closes above the midpoint of the first candle pattern.
4. Set stop-loss below the Doji candlestick’s low.
5. Backtest the Bullish Abandoned Baby pattern in different market conditions before using it in live trading.

Below is a simple AFL script to detect the Bullish Abandoned Baby in Amibroker:

// Bullish Abandoned Baby AFL Code for Amibroker

_SECTION_BEGIN(“Bullish Abandoned Baby”);

FirstBearish = Ref(Close, -2) < Ref(Open, -2);

DojiWithGapDown = Ref(Close, -1) > Ref(Open, -1) AND Ref(High, -1) < Ref(Low, -2);

FinalBullish = Close > Open AND Close > Ref(Midpoint(High, Low), -2) AND Open > Ref(High, -1);

BullishAbandonedBaby = FirstBearish AND DojiWithGapDown AND FinalBullish;

PlotShapes(IIf(BullishAbandonedBaby, shapeStar, shapeNone), colorGreen, 0, Low);

_SECTION_END();

This script finds Bullish Abandoned Baby patterns and marks them with a green star.

The Bullish Abandoned Baby candlestick is a strong reversal candlestick pattern that signals a potential shift from a bearish trend to a bullish trend.

• It consists of a large bearish abandoned baby pattern, a Doji candlestick with a gap down, and a large bullish pattern occurs with a gap up.
• Traders use this pattern alone to confirm a change in momentum before entering long positions.
• Risk management and proper confirmation are essential to avoid false signals. 

Testing this pattern across different market conditions can improve its effectiveness in trading strategies.

Links to articles about other Candlestick Patterns

1. Doji
2. Hammer
3. Inverted Hammer
4. Bullish Engulfing
5. Bearish Engulfing
6. Morning Star
7. Evening Star
8. Shooting Star
9. Hanging Man
10. Piercing Pattern
11. Dark Cloud Cover
12. Three White Soldiers
13. Three Black Crows
14. Dragonfly Doji
15. Gravestone Doji
16. Spinning Top
17. Marubozu
18. Tweezer Top
19. Tweezer Bottom
20. Bullish Harami 
21. Bearish Harami
22. Rising Three Methods
23. Falling Three Methods
24. Bullish Abandoned Baby 
25. Bearish Abandoned Baby 
26. Bullish Kicker 
27. Bearish Kicker
28. Three Inside Up
29. Three Inside Down
30. Upside Gap Two Crows
31. Mat Hold
32. Upside Tasuki Gap
33. Downside Tasuki Gap