UK Accounting Glossary
The bullish abandoned baby is a rarely seen candlestick charting pattern that traders consider reliable at predicting reversals. Three candles comprise the bullish abandoned baby: a long black candle the first day, followed by a Doji candle the second day that gaps below the black candle, followed by a white candle the third day that gaps above the Doji. If the bullish abandoned baby occurs during or soon after a downtrend, it signals the reversal of the downtrend. Some traders consider the bullish abandoned baby more reliable when used with other technical indicators (eg: RSI, MACD, stochastics, etc.). In foreign exchange markets, the bullish abandoned baby pattern manifests itself with a slight difference. Because gaps are very rare in currency trading, the Doji element in the forex version of the bullish abandoned baby doesn’t require a gap down, and the following white candle doesn’t require a gap up. The counterpart to the bullish abandoned baby is the bearish abandoned baby.
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This glossary post was last updated: 4th February 2020.