Stubborn Abandoned Baby Candlestick Pattern
Bullish Abandoned Baby Candlestick Pattern: Technical analysis is the art of predicting future price movements based on historical market data, with a particular focus on price and volume. Candlestick patterns are a clear visual representation of price movements over a specific period of time.
These patterns, consisting of open, high, low, and close, provide insight into market sentiment and potential trend reversals or continuations. Candlestick patterns help traders make informed decisions about buying and selling stocks by providing valuable information about market dynamics and potential trading opportunities. In this article, we will look at one such candlestick pattern, the bullish abandoned baby candlestick pattern.
Stubborn Abandoned Baby Candlestick Pattern – Definition
The bullish abandoned baby candlestick pattern is a three candlestick pattern that indicates a bullish reversal. These three candlestick patterns are similar to the Morning Doji Star candlestick pattern. This pattern prefers to appear after a downtrend. This is because the probability of a bullish reversal indication derived from the formation of this pattern is higher. probability Of success.
This three candlestick formation consists of a long red candle followed by a doji candle, followed by a long green candle.
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Bullish Abandoned Baby Candlestick Pattern – Formation
For a three candlestick pattern to be called a bullish abandoned baby candlestick pattern, several conditions must be met and they are:
- The first candle should be a long bearish candle (red candle) in a downtrend.
- The second candle should be a doji with a gap opening downwards. Here, the wick of the doji candle must be below the lower wick of the previous candle. This means that the higher price of a doji candle must be lower than the low price of the previous candle.
- The third candle should be a long bullish candle that opens with a gap up. Here the low price of the green candle must be higher than the high price of the previous doji candle.
Understanding the Bullish Abandoned Baby Candlestick Pattern
A bullish abandoned baby candlestick pattern usually indicates a change in market sentiment and the conclusion of lower prices. The first candle is red as it is part of a downtrend, so there is more selling pressure and the price falls.
The next candle starts with the gap lower. This is an attempt by the seller to significantly lower the price. Here the price ends with a doji formation, indicating exhaustion of sellers and indecisiveness in the market.
The third candle is green and gapped, indicating a change in market sentiment as buying pressure exceeds selling pressure. Based on the formation of these patterns and the confirmation of other indicators, traders can take long positions in securities.
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Bullish Abandoned Baby Candlestick Pattern – Trading Strategy
Traders looking to trade based on this pattern must ensure that the trend before the pattern was formed was a downtrend. Once this is confirmed, here are the instructions for trading:
- entry: If the stock price begins to trade above the closing price of the third candle of the Bullish Abandoned Baby pattern, traders can take a long position.
- Target: Traders can exit a trade when the stock’s price reaches near an immediate resistance zone. Once this level is reached, you can also take a partial profit on the trade and hold the remaining position until the next resistance level.
- Stop Loss: Traders can place a stop loss near the low price of a bullish abandoned baby candlestick pattern.
Bullish Abandoned Baby Candlestick Pattern – Example
On the NIFTY 50 INDEX 1-day chart above, you can see this pattern forming at the bottom of a small retracement. As discussed in this article, prices trended upward after this pattern was formed. Based on the formation of this pattern, derivatives traders could place trades accordingly.
Stubborn Abandoned Baby Vs Morning Doji Star Candlestick Pattern
A morning doji star is formed during a downtrend consisting of three candles: a large bearish candle, followed by a doji candle, and finally a large bullish candle. Here, the high point of the Doji candle is within the range of the other two candles in the pattern.
The Bullish Abandoned Baby shares similar characteristics to the Morning Doji Star pattern, but the high of this pattern’s Doji candle is completely separate from the low of the other two candles.
Both patterns suggest a bullish reversal, but the bullish abandoned baby pattern has a higher probability of success than the morning doji pattern.
Bullish Abandoned Baby Candlestick Pattern – Key Features
- The first candle is a long red candle in a downtrend.
- The second candle is a doji where the gap opens downwards.
- The third candle is a long green candle that opens with a gap up.
- The high of the Doji candle in this pattern is completely separate from the lows of the other two candles in the pattern.
- The formation of this pattern signals a bullish reversal.
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conclusion
In this article about Bullish Abandoned Baby Candlestick Pattern, we have discussed three candlestick patterns that are used to derive a bullish reversal indicator called the Bullish Abandoned Baby Candlestick Pattern. We understood how it is formed and how it can be interpreted and utilized by market participants.
We also discussed how this pattern differs from the Morning Star and Morning Doji candlestick patterns. Setting an appropriate stop loss is important if a trader is trading based on: technical analysis This is because there is always a possibility that the market will move contrary to the analysis.
Written by Praneeth Kadagi
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