Bearish Abandoned Baby Candlestick Pattern

The bearish abandoned baby is a rare Japanese candlestick pattern that makes $55.70 in the stock market on average per $100 risked.

The abandoned baby pattern only occurred 54 times in the last 21 years in the stock market and did not occur in the crypto and forex markets. In other words, this is a very rare pattern and the data. At the same time, it hints toward this bearish reversal pattern producing profits on the downside; I would prefer more statistical evidence.

With that out of the way, let’s learn more about these abandoned baby patterns.

Bearish Abandoned Baby Candlestick Pattern Illustration

The bearish abandoned baby is a three candle pattern than is thought of as a bearish reversal. 

I say “thought of” since I don’t have enough data to state otherwise confidently. 

With this in mind, how do we identify this bearish abandoned baby pattern?

How to Identify the Bearish Abandoned Baby Candlestick Pattern

Bearish Abandoned Baby Candlestick Pattern Identification (AZN)

The following are the requirements for a valid bearish abandoned baby candlestick pattern:

  • The first candlestick must have a long bullish real body.
  • The second candlestick must be a doji.
  • There must be an upside gap where the wicks of the first and second candlesticks don’t touch.
  • The third candle must be bearish with a real body that moves well within the first candle’s body.
  • There must be a downside gap where the wicks of the second and third candlesticks don’t touch.
  • The pattern must occur in an uptrend.

We can see a bearish abandoned baby example on the AstraZeneca (AZN) daily chart on August 19th, 2015.

The price is above the fifty-day moving average, constituting a bullish trend. We see the first green candle with a relatively long bullish body. Day two prints a red doji candle. And we see on day three that the third candlestick is a large down candle that moves well within the first bullish candle.

With an understanding of how to identify this pattern on our candlestick charts, let’s cover the trading strategy designed to extract profits from these chart patterns.

How to Trade the Bearish Abandoned Baby Candlestick Pattern

The bearish abandoned baby pattern is a bearish reversal pattern. This pattern forms again on the Budwiser (BUD) daily chart on December 13th, 2012.

The first candle is a strong advancing candle, the second candle gaps up, and the third candle is a significant bearish candle that moves well within the first candle’s real body.

With the last candle identified, a trader will go short at the break of the final candle’s low with a stop loss above the high of the middle candle, assuming the primary trend reverses. 

In the Budwiser example, the price trends sideways before it moves downward. Experienced traders would likely have stopped out as the price did move above the high of the abandoned baby top, but if you gave your stop target some wiggle room, you might have profited from the downward reversal trend.

Due to the lack of data, it may make sense to use additional trading indicators to analyze intraday price action when trading this pattern.

Does the Bearish Abandoned Baby Candlestick Pattern Work? (Backtest Results)

Using the following rules, I backtested the bearish abandoned baby candlestick pattern on the daily timeframe in the crypto, forex, and stock markets.

  • A close above the 50-day SMA constitutes an uptrend.
  • I tested risk-reward ranges from 1 to 5. 
  • The optimal risk-reward ratio is selected using profit per bar.
  • Entry and exits are discussed in the how-to trade section above.
  • Confirmation must occur within three days of the pattern signal.

Bearish Abandoned Baby Bearish Reversal Backtest Results

cryptoforexstock
pattern_namebearish abandoned babybearish abandoned babybearish abandoned baby
pattern_categorybearish reversalbearish reversalbearish reversal
pattern_bars333
required_trenduptrenduptrenduptrend
traded_asbearish reversalbearish reversalbearish reversal
stop_bar_typehighhighhigh
entry_bar_typelowlowlow
risk_reward0.00.03
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers0.00.036
patterns0.00.087
trades0.00.054
confirm_perc0.00.00.62
wins0.00.021
losses0.00.033
win_perc0.00.00.389
avg_win_bars0.00.013.95
avg_loss_bars0.00.020.21
cons_wins0.00.03
cons_losses0.00.02
edge0.00.00.557
cryptoforexstock
pattern_namebearish abandoned babybearish abandoned babybearish abandoned baby
pattern_categorybearish reversalbearish reversalbearish reversal
pattern_bars333
required_trenduptrenduptrenduptrend
traded_asbearish reversalbearish reversalbearish reversal
stop_bar_typehighhighhigh
entry_bar_typeclosecloseclose
risk_reward0.00.01
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers0.00.036
patterns0.00.087
trades0.00.059
confirm_perc0.00.00.68
wins0.00.037
losses0.00.022
win_perc0.00.00.627
avg_win_bars0.00.02.51
avg_loss_bars0.00.06.36
cons_wins0.00.04
cons_losses0.00.02
edge0.00.00.257

Bearish Abandoned Baby Bullish Continuation Backtest Results

cryptoforexstock
pattern_namebearish abandoned babybearish abandoned babybearish abandoned baby
pattern_categorybearish reversalbearish reversalbearish reversal
pattern_bars333
required_trenduptrenduptrenduptrend
traded_asbullish continuationbullish continuationbullish continuation
stop_bar_typelowlowlow
entry_bar_typehighhighhigh
risk_reward0.00.02
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers0.00.036
patterns0.00.087
trades0.00.041
confirm_perc0.00.00.47
wins0.00.02
losses0.00.039
win_perc0.00.00.049
avg_win_bars0.00.00.5
avg_loss_bars0.00.00.05
cons_wins0.00.01
cons_losses0.00.03
edge0.00.0-0.852
cryptoforexstock
pattern_namebearish abandoned babybearish abandoned babybearish abandoned baby
pattern_categorybearish reversalbearish reversalbearish reversal
pattern_bars333
required_trenduptrenduptrenduptrend
traded_asbullish continuationbullish continuationbullish continuation
stop_bar_typelowlowlow
entry_bar_typeclosecloseclose
risk_reward0.00.01
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers0.00.036
patterns0.00.087
trades0.00.069
confirm_perc0.00.00.79
wins0.00.03
losses0.00.066
win_perc0.00.00.043
avg_win_bars0.00.00.0
avg_loss_bars0.00.00.0
cons_wins0.00.01
cons_losses0.00.03
edge0.00.0-0.917

Bearish Abandoned Baby Mean Reversion Backtest Results

cryptoforexstock
pattern_namebearish abandoned babybearish abandoned babybearish abandoned baby
pattern_categorybearish reversalbearish reversalbearish reversal
pattern_bars333
required_trenduptrenduptrenduptrend
traded_asbullish mean reversionbullish mean reversionbullish mean reversion
stop_bar_typeatratratr
entry_bar_typepattern_lowpattern_lowpattern_low
risk_reward0.00.04
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers0.00.036
patterns0.00.087
trades0.00.032
confirm_perc0.00.00.37
wins0.00.07
losses0.00.025
win_perc0.00.00.219
avg_win_bars0.00.020.71
avg_loss_bars0.00.04.6
cons_wins0.00.02
cons_losses0.00.02
edge0.00.00.096
cryptoforexstock
pattern_namebearish abandoned babybearish abandoned babybearish abandoned baby
pattern_categorybearish reversalbearish reversalbearish reversal
pattern_bars333
required_trenduptrenduptrenduptrend
traded_asbearish mean reversionbearish mean reversionbearish mean reversion
stop_bar_typeatratratr
entry_bar_typepattern_highpattern_highpattern_high
risk_reward0.00.02
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers0.00.036
patterns0.00.087
trades0.00.019
confirm_perc0.00.00.22
wins0.00.08
losses0.00.011
win_perc0.00.00.421
avg_win_bars0.00.05.38
avg_loss_bars0.00.04.09
cons_wins0.00.01
cons_losses0.00.02
edge0.00.00.262

We see that the bearish reversal does have a positive expectancy with an optimal risk-reward ratio of 3. And while there is not enough data to confidently state this pattern works as intended, the data does hint in this direction.

Similar Patterns

Bullish Abandoned Baby vs. Bearish Abandoned Baby

The bullish abandoned baby candlestick pattern and bearish abandoned baby are three bar reversal candlestick patterns. Still, they are opposites – the only difference is one is bullish, and the other is bearish.

The bullish abandoned baby pattern occurs in a downtrend while, as mentioned earlier, the bearish abandoned baby occurs in an uptrend. The first candle of the bullish abandoned baby is bearish instead of bullish. The second candlestick is a gapped down doji instead of an abandoned doji in the opposite direction, and the third candlestick of the bullish abandoned baby pattern is bullish that moves well within the first candle’s real body.

Evening Doji Star vs. Bearish Abandoned Baby

The evening doji star candlestick pattern, which is different than the evening star pattern,  is almost identical to the bearish abandoned baby. The only difference is that the evening star does not have an upside gap while the bearish abandoned baby does. 

The Bottom Line

The bearish abandoned baby is a rare three bar pattern. The data hints that the pattern signals a bearish reversal, but unfortunately, the pattern occurs so rarely that it’s tough to state this with statistical confidence. 

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