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Bearish Abandoned Baby
Bearish Abandoned Baby
This is a three-candlestick pattern signaling a major top reversal. It is exactly the same as the Bearish Evening Doji Star with one important difference. The shadows on the Doji must also gap above the shadows of the first and third days. Its name comes from the second day of the pattern, which floats out on the chart by itself like an abandoned baby of the first and third days. Basically, the pattern consists of a white candlestick followed by a Doji that gaps away (including shadows) from the prior white candlestick and the following black candlestick whose closing is well into the first white body.
How to identify
1st day is a white day.
2nd day is a doji whose shadows gaps above the 1st day’s close.
3rd day is a red day that gaps down and contains no overlapping shadows.
Psychology
The gap up on the second day encourages the bulls, however the close on the second day is nearly the same as the open on the second day. This could be a sign of temporary profit taking by the longs, however the third day reveals that the more likely scenario is indecision on the second day. Watch for additional downside price action in the next few days.
