The Bearish Abandoned Baby Candlestick
Bearish abandoned baby candlestick is a visual formation on stock or Crypto charts and signals a reversal in a bullish period. It has three candles and forms at the peak of a bull trend and is highlighted by increasing selling pressure. The pattern underlines weakening bulls and is a warning sign for traders longing their Cryptocurrency or stock positions. The Bearish abandoned baby candlesticks are formed when the market sentiment shifts from buying to the selling of Cryptos or stock. The reasons behind this can be fundamental or any other technical indicator, such as the Relative Strength Index (RSI)
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Recognition criteria of Bearish Abandoned Baby
- The market should be in an uptrend with bulls in complete control
- There should be a green candlestick on Bitcoin chart to mark the start of the abandoned baby pattern
- There should be a doji candle on the third day, because of the war between bulls and bear. The candle shouldn’t overlap the shadow and body of the first and third candle
- Bears should take over the market with the third candle pushing the price for a downtrend
How bearish abandoned baby comes into formation?
Bearish abandoned baby candle pattern signal a price downtrend reversal for the price of stock or Cryptocurrency. It helps traders to open a long or short position and benefit from the formation. Here is how the pattern comes into formation and dictates the change in market trend.
White or Green Candle: The green candle is a large bullish candlestick and occurs when the price of Bitcoin or other asset closes higher than previous candles. The traders usually take the profit on this candle and closes their long position.
Doji or Middle candle: A doji candlestick is the second candle in the bearish abandoned baby formation and occurs when the stock or cryptocurrency open and closes at almost the same price. The candle is usually represented by a dash or a star type visual and signifies indecisive action by traders. Bulls and bear are in a close fight at this point
Red Candle: The red candle is the last formation and completes the Bearish abandoned baby candlestick pattern. The bulls lose momentum and price falls with a large bearish candle. Traders cut their losses at this point and wait for the next market reversal
It is important to note that the first and last candle should be significantly large to complete the formation. If the third candle doesn’t push the price lower than the half body of the first candle, the Bearish abandoned baby candlestick pattern usually remains invalid.
Examples of the abandoned baby candlestick
Here is an example of an abandoned baby candlestick bearish pattern. The chart below is from a popular cryptocurrency, namely NEO. It showcases the formation of a bearish reversal pattern and price action takes the downtrend. Stock and Cryptocurrency traders should also note that the bearish abandoned baby best works in the daily timeframe and using it in an hourly chart distorts the larger picture.
A bearish abandoned baby is one of the best visual patterns to confirm the market reversal. It assists the trader in decision making and has an over 70% success rate. If you are just starting with stock or Cryptocurrency trading, this pattern will probably help you make quick gains by leveraging on short positions. The bearish abandoned baby candlestick pattern is similar to evening star candlestick pattern, except for the fact that its middle candle shouldn’t overlap the body of the first and third candle.
You might also want to read about Bullish Abandoned Baby Pattern to learn other market dynamics.