Abandoned Baby Bearish

The Bearish Abandoned Baby (or Abandoned Baby Top) is a candlestick pattern that signals a reversal in the current uptrend and indicates the beginning of a downtrend.

Considered an accurate reversal pattern, the Bearish Abandoned Baby is a three-candle chart pattern whereby:

The first candle is a large white candlestick located within a defined uptrend.

The second candle is a doji candle (open equal to the close) that gaps above the close of the first bar.

The third candle is a large red candle that opens below the second bar and is used to show the change in trader sentiment.

Signalling a rapid shift in momentum from the bulls to the bears in the market, a fourth day bearish candle is used as a confirmation of the reversal pattern. Bulkowski suggests the Bearish Abandoned Baby has a reversal accuracy of approx. 69-percent and the reliability of the pattern improves with an increase in gapping and trading volume.

Considered a rare find on a price chart, the accuracy of the reversal signal is greatly improved when it is used in conjunction with other technical indicators such as the MACD and RSI to confirm the reversal.