Bullish Abandoned Baby

The bullish abandoned baby is a rare three-candle candlestick reversal pattern that signals a potential end to a downtrend and the start of an upward move. It highlights a sharp sell-off, a moment of indecision, and then a strong bullish response.

Key takeaways

• Appears after a downtrend and consists of three bars: a large bearish candle, a doji that gaps below it, and a large bullish candle that gaps up.
• Indicates sellers have been exhausted and buyers are stepping in.
• Pattern is uncommon because it requires specific price gaps; some traders accept slight variations (multiple dojis, imperfect gaps).
• Trade setup and risk management are essential because reversals often bring increased volatility.

Pattern structure and psychology

1. First bar: a large down (bearish) candlestick within an established downtrend — represents strong selling pressure.
2. Second bar: a doji (open ≈ close) that gaps below the first bar’s close — shows indecision and weakening selling momentum.
3. Third bar: a large bullish candlestick that opens above the doji and advances significantly — demonstrates buyers regaining control.

Psychology: the pattern shows a transition from aggressive selling to indecision and then to renewed buying. The gaps around the doji make the shift more pronounced and distinguish this pattern from more common star patterns.

Variations and special considerations

• Strict form requires gaps on both sides of the doji, but many traders accept:
• Dojis that don’t fully gap below the prior candle.
• Multiple successive dojis before the bullish move.
• Increased volatility often accompanies reversals; allow for wider stops or confirm with volume/other indicators.
• Because it’s rare, consider scanning tools if you want to find occurrences systematically.

How traders commonly trade it

Entry:
* Common entry: buy on a break above the high of the third (bullish) candle, often using a stop-limit or market order.

Stop-loss:
* Conservative stop: below the low of the doji (the middle bar).
* Tighter stop: below the low of the third candle.
* Account for volatility when sizing the stop.

Profit target / exit methods:
* No fixed native target—use one of:
* Fibonacci retracement levels of the prior downtrend (e.g., 38.2% or 50%).
* Predefined risk/reward ratio (e.g., 1:2 or 1:3).
* Technical indicators (moving averages, resistance levels) or trailing stops.
* Combine with volume or momentum confirmations to increase conviction.

Example (variation)

Real-world examples often show slight deviations from the textbook form (e.g., doji not fully gapping, or two dojis in a row). Even with those deviations, the underlying sequence — sharp drop, leveling/indecision, then a decisive bullish advance — preserves the pattern’s intent and can precede meaningful rallies.

Similar patterns

• Morning Star / Evening Star: also three-bar reversal patterns, but middle candle need not be a doji nor require gaps.
• Island Reversal: involves price gaps creating an “island” of price action; related in concept but usually spans more bars and wider gaps.

Summary

The bullish abandoned baby is a distinctive candlestick reversal signal that highlights a clear shift from selling pressure to buying interest. Because it’s rare and sensitive to volatility, use confirmations, prudent stops, and predefined exit rules when trading the pattern.