Bearish Abandoned Baby

In this video we're gonna look at what is the abandoned baby candlestick pattern, stay tuned. Hatred is a warm welcome to you, okay so candlesticks pretty useful tool for traders to make trading decisions with loads of candlestick patterns out there. However I want to look in this video at one in particular called the abandoned baby. Why is it called abandoned baby would become clear in a second but why don't people come up these ridiculous names with things I don't know why call it an abandoned baby.

Anyway let's have a look at what it is and then more importantly, let's look at potentially how we can use it to make better trading decisions. Allright so we have two scenarios here, we've got a bullish scenario and a bearish scenario. An excuse my candlestick drawings here but hopefully you'll get the idea. Okay, so bullish abandoned baby scenario is this we have a market that's moved down and all we've got in this scenario all I've got in this in this kind of diagram is what's required to qualify as an abandoned baby we'll talk about in a more in there towards the end of the video about how we can put this into a framework of a larger time frame and make some better train decisions but generally speaking abandoned baby has to have this you've got a down move on day, one just indicated by the red candle then on day two you have a gap lower so the low of the Pride Day is here as we know the lower candlestick we've got a gap lower and we've got what's called a doji falling which indecision type of Candlestick not a very big range generally the open is the same as the clothes so you get this cross format which would say hey there's no body - it's got a very very thin body it's nothing much has happened we've got low after a big move we've not filled the gap the high is lower than the prior low and we've just sat there and gone what what's happened.

The next day however, so day three we've got a gap up above that doji high so above this high point here we've gaps up to here we've rallied on the day the low of that day still above so this fresh air in between if I could just about do this without ruining it that's that fresh air so that gap has been unfilled and the next day we have a bullish move a nice green candle two rallies from bottom to top. So what does actually mean if we look at it I thought you know what it's going to bearish first it which is exactly the same but just obviously and the other way round we've got a good bullish move we've got a gap up on day two and day two we have the indecision doji and then they three we have a gap down so again important thing is to qualify as the abandoned baby we've got to have that fresh air zone there and then we have a kind of change in sentiment that push it down.

That's the key to this guys is it's a change in sentiment these things are pretty rare because you know to have an a gasps in the first place and obviously we're not talking about generally. I'm not going to talking about Forex here because to have two gaps in a row it's not going to happen, this is more like a stock kind of event or for training a cash index something that's got a definitive or definite closed and open so this is rare because you'd have a big gap outside of ranges reason be rare but then to have another gap back the other way is quite rare so if we see this we want to pay attention to it why do you want to pay attention to it you just think about what's actually happening here you've got a scenario here where you know the market perhaps has come down a reasonable way. You've got a bearish move on day one you know kind of pre solid red candle pretty standard dark red or whatever.

I have a colleague like shot candle indicating you know we've got a supply-demand imbalance lot more supply coming in and demand and we finished on lows it's a bearish day put it down as a bearish day next day we got blower so bears or sellers are kind of saying okay just a continuation now was a bad day maybe it was a catalyst from news whatever it may be we've gapped down the day and then we kind of just sit there in other words sellers don't become extra aggressive they're back off a little bit more or maybe some by step up either way we're a little bit more of a neutral situation and so that's okay probably quite normal that maybe the next day we'd accept the continuation but then something happens whatever it may be it could be news again it could be catalyst could just be just changing sentiment whatever it is the causes us to gap up above that high it's the change in sentiment that makes to such a powerful paternalistic pattern because we've changed sentiment so quickly and so aggressively you know a gap up above out of a range is as an aggressive change in sentiment.

It's not just a small gap from the cloves you know a small gap from the clothes will be there that's not it's okay but it's not as aggressive as hey right out of the range so literally every single person who has got involved they're on the short side he's struggling every single person who got involved in alongside it's very very happy we're changing the emotional framework of what's going on it's caught a lot of people out potentially if it's if it's enough for it to gap above that high so it's a significant event that people believe at the open it's worth revaluing to that level so it's important this is a good thing to watch that because not only is it significant enough to gap up but conjunction with the prior day one bearish move means that we've got a big shift from one way to the other not just such a neutral to so aggressive we've seen one way supply supply supply and then a massive shift back into demand or within the space of kind of a three day period and same with the bearish move so where could we fitness in our trading so let's say we have we've had an uptrend and we've kind of pushed up and then we see this kind of scenario what would we do we textbook says that we would short this on the clothes here or we buy on the clothes here and then we'd hold it for a multi-day move our stop would probably have to be either above the high of that or probably to be fair you probably get where we're putting it there so there would be your stop-loss above that high there on that on that down day your short will be on the clothes or if you want it to be a little bit clever a parry you could take it a little bit before the clothes if that was gonna form anyway and say you're right in the bottom of that range and you're coming to the final and he thought you know what I think the final now I might even press down even more maybe get a bit more juice from the trade but let's keep it textbook for now.

Textbook is you short on there and then your target is going to be whatever it's going to be by the way this candle could be longer I've only drawn this kind of image purposes that it's not quite as big as that it could be even longer than that and obviously the the more more aggressive the change in sentiment or the more aggressive to move after that abandoned baby the more likely we're probably guess of a continuation because that demand supply demand imbalances so shifted that way so that's something to look for most pretty free rare out there but if you see one maybe take note and maybe there's a trade opportunity to be had from scanning for these kind of things and putting one of these setups in your trading plan.