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The Bullish And Bearish Abandoned Baby Candlestick Pattern

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Nov. 21 2019, Updated 4:46 p.m. ET

Bullish Abandoned Baby candlestick pattern

The Bullish Abandoned Baby candlestick pattern is a reversal pattern. The pattern has three candles. It forms at the bottom of a trend. In this pattern, the first candle is any long and bearish candle. The second candle is a small and bearish candle—or a Doji. The second candle doesn’t overlap the first or third candle. The third candle is any long and bullish candle.

This pattern forms when the forces of selling stocks shift to buying stocks. This happens when investors anticipate a trend change due to psychological or fundamental reasons.

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In the Morning Star or Evening Star pattern, the second candle overlaps the first and third candle. In the Bullish Abandoned Baby pattern, there isn’t an overlap between the first and third candle. This shows a gap in the prices’ opening. The buyers or sellers are pushing the prices. As a result, a gap forms.

Bearish Abandoned Baby candlestick pattern

The Bearish Abandoned Baby pattern is a reversal pattern. The pattern has three candles. It forms at the peak of a trend. In this pattern, the first candle is long and bullish. The second candle is a small and bullish candle—or a Doji. The second candle doesn’t overlap the first or third candle. The third candle is long and bearish.

This pattern forms when the forces of buying stocks shift to selling stocks. This happens when investors anticipate a trend change due to psychological or fundamental reasons.

These patterns are useful for trend identification. The Bullish Abandoned Baby pattern can be used as an entry point. The Bearish Abandoned Baby pattern can be used as an exit point. It’s advisable to use a combination of patterns and indicators to determine your trading strategy.

Key stocks with these patterns

Recently, we’ve seen the Bullish Abandoned Baby pattern in Alexco Resource Corp. (AXU) and InSite Vision Inc. (INSV). In contrast, Allied World Assurance Company Holdings (AWH) and ETFs—like the Vanguard REIT ETF (VNQ) and the Financial Select Sector SPDR ETF (XLF)—are showing the Bearish Abandoned Baby pattern.

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