The Abandoned Baby Stick Pattern is a trend reversal signal. Once it shows up in a technical analysis chart, it means that the current price movement is about to turn around and granted you place for a correct bet.

For the advanced trader in the foreign exchange market, the Abandoned Baby Stick Pattern is a trend reversal signal. Once it shows up in a technical analysis chart, it means that the current price movement is about to turn around and granted you place for a correct bet, where results are likely to go in your favor. Since it can be a bit challenging to identify with it being a distinct formation, an inexperienced trader may want to make a pass when offered the chance to use it.

 

What Is It? 

In a technical analysis chart, once you see a trend that is going downward and is partnered with a grand bearish candle, chances are, you spotted the Abandoned Baby Stick Pattern. Apart from privileging the trader with the ability to nod regarding current market conditions, it indicates that there is a rapid change in momentum from a bearish market to a bullish market.

Below is a chart example of Abandoned Baby:

abandoned baby

What Does It Look Like?

The Abandoned Baby Stick Pattern looks similar to morning and evening star formations. The determining factor of the particular pattern is that it is a 3-bar pattern whose shadows and real bodies are not supposed to overlap from bars 1 to 2 and 2 to 3.

The 3 bars:

  • Bar 1 – it is a bar that moves in the main trend’s direction
  • Bar 2 – it is a doji pattern, it does not overlap, and it allows a gap in the main trend’s direction
  • Bar 3 – it is a bar that moves in the reverse direction of the gaps and the 1st day

 

The Best Thing

The Abandoned Baby Stick Pattern is highly reliable. It presents itself in the form of price actions on the third and the fourth day. Additional data from different technical indicators can strengthen a trend signal and show oversold status and volume upswings. However, once it is spotted, a trader usually does not need further confirmation of an incoming trend reversal. 

 

An Incredible Technique

A technique of spotting the Abandoned Baby Stick Pattern in any technical analysis chart is to place a trailing stop order a bit below the doji pattern. Doing so controls losses without influencing potential profits, if there is failure to exit at the highest point of an upswing. Also, it allows you to set a strong position regarding the best time to enter and exit a trade.

 

Reference: This article has been posted with the permission of its author who belongs to MTrading Malaysia – An online Forex broker.