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.