The abandoned baby pattern is one of the rarest and most powerful candlestick reversal patterns in technical analysis. When it appears on your charts, it often signals a significant change in market direction. In this guide, we will explain exactly what the abandoned baby pattern looks like, how to identify it, and how to trade it effectively.
What is the Abandoned Baby Pattern?
The abandoned baby is a three-candle reversal pattern that gets its name from the middle candle being "isolated" or "abandoned" from the candles on either side. This isolation happens because of gaps that form between the candles, making the middle candle look like it has been left alone.
Key characteristic: The abandoned baby pattern requires gaps on both sides of the middle candle. This is what makes it so rare in most markets, as true gaps are uncommon, especially in forex where markets trade nearly 24 hours.
The Two Types of Abandoned Baby Patterns
1. Bullish Abandoned Baby
The bullish abandoned baby appears at the bottom of a downtrend and signals a potential reversal to the upside. Here is what it looks like:
- First candle: A long bearish (red) candle continuing the downtrend
- Second candle: A small doji that gaps down from the first candle
- Third candle: A long bullish (green) candle that gaps up from the doji
Bullish Abandoned Baby Example
Stock XYZ has been falling for several days. On Monday, it drops from $50 to $48. On Tuesday, it gaps down and opens at $47, trades in a tiny range, and closes near $47 (forming a doji). On Wednesday, it gaps up and opens at $48.50, then rallies to close at $51. This is a bullish abandoned baby pattern.
2. Bearish Abandoned Baby
The bearish abandoned baby appears at the top of an uptrend and signals a potential reversal to the downside. Here is the structure:
- First candle: A long bullish (green) candle continuing the uptrend
- Second candle: A small doji that gaps up from the first candle
- Third candle: A long bearish (red) candle that gaps down from the doji
Bearish Abandoned Baby Example
Stock ABC has been rising for weeks. On Thursday, it climbs from $100 to $105. On Friday, it gaps up to $107, shows indecision, and closes near $107 (doji). On Monday, it gaps down to $104 and sells off to close at $99. This is a bearish abandoned baby pattern.
Why the Abandoned Baby Pattern Works
The psychology behind this pattern is powerful:
- First candle: Shows strong momentum in the current trend direction
- Gap to doji: Represents exhaustion where buyers and sellers are in balance
- Gap in opposite direction: Shows sudden shift in sentiment and urgency
- Third candle: Confirms the new trend with strong follow-through
The double gap creates a clear "point of no return" where the market psychology has clearly shifted. The abandoned doji in the middle represents a turning point where control changed hands.
How to Trade the Abandoned Baby Pattern
Here is a systematic approach to trading this pattern:
Entry Strategy
- Wait for the pattern to fully complete (all three candles must form)
- Enter on the open of the fourth candle, or wait for a small pullback
- For bullish patterns, enter long. For bearish patterns, enter short or sell
Stop Loss Placement
- Place your stop loss below the low of the doji for bullish patterns
- Place your stop loss above the high of the doji for bearish patterns
- The doji represents the turning point, so if price goes back through it, the pattern has failed
Profit Targets
- First target: Measure the height of the third candle and project it forward
- Second target: Look for previous support or resistance levels
- Consider trailing your stop to lock in profits as the move develops
Important Considerations
Before trading the abandoned baby pattern, keep these points in mind:
- Rarity: This pattern is uncommon. Do not force trades that almost look like it
- Market type: Works best in stocks and futures where gaps are common
- Volume: Look for increased volume on the third candle to confirm the reversal
- Context: The pattern is more reliable after an extended trend
Pro tip: In forex markets, true abandoned baby patterns are extremely rare because the market trades continuously. What looks like an abandoned baby on a forex chart is usually not a true gap pattern.
Common Mistakes to Avoid
- Ignoring the gaps: Without true gaps, it is not an abandoned baby pattern
- Trading before completion: Always wait for the third candle to close
- Forgetting context: The pattern needs a prior trend to reverse
- Using in choppy markets: The pattern works best after clear trends
Combining with Other Indicators
To increase your success rate, confirm the abandoned baby with:
- Support/resistance: Pattern near key levels is more reliable
- RSI: Oversold readings for bullish, overbought for bearish patterns
- Volume: Increasing volume on the reversal candle adds confirmation
- Moving averages: Bouncing off major moving averages strengthens the signal
Track Your Pattern Trades
Pro Trader Dashboard helps you track all your chart pattern trades. See which patterns work best for you and improve your trading decisions with data.
Summary
The abandoned baby pattern is a rare but powerful reversal signal. It requires three candles with gaps isolating the middle doji. When you spot a true abandoned baby, especially at key support or resistance levels with confirming indicators, it can lead to significant profitable trades. Remember to always wait for pattern completion and manage your risk with proper stop losses.
Want to learn more about candlestick patterns? Check out our guides on the dark cloud cover pattern and piercing line pattern.