Abandoned Baby Bottom in technical analysis
Updated on March 1, 2023
The Abandoned Baby Bottom refers to a bullish reversal pattern. This pattern appears in a downtrend and signals the potential end of the bearish move along with the start of a new uptrend.
How to identify the abandoned baby bottom?
The pattern consists of three candles and is formed as follows –
The first candle is a long red candle or a bearish candle indicating a strong downtrend.
The second candle is a Doji candle, which is a candle with little or no real body along with long upper and lower shadows. This Doji candle is formed when the opening and closing prices are nearly equal indicating a potential change in direction.
The third candle is a white candle or a bullish candle which opens below the close of the Doji candle and closes above the midpoint of the first red candle.
What does the abandoned baby bottom candle indicate?
The Abandoned Baby Bottom pattern is considered a bullish reversal pattern as it suggests that the bears have lost control and the bulls have taken control of the market. Also, the long red candle represents the bears driving the price down. The Doji candle represents indecision and potential change in direction. Also, the white candle confirms the change in direction as the bulls push the price higher.