The bullish abandoned baby is an infrequently occurring Japanese candlestick pattern that makes $36.30 in the stock market on average per $100 risked.
The bullish abandoned baby pattern only occurred 63 times in the last 21 years in the stock market and did not occur in the crypto and forex markets.
In other words, the pattern occurs too infrequently to give us statistical significance. The data hints toward this bullish reversal pattern producing profits on the upside, but data-driven traders will opt for patterns with more history.
Let’s learn more about this bullish abandoned baby pattern with that out of the way.
What Is a Bullish Abandoned Baby Candlestick Pattern?
The bullish abandoned candlestick pattern is considered a bullish reversal pattern. The pattern occurs too infrequently on the daily chart to produce statistically significant results to prove or disprove the reversal assertion.
With this understanding, how did the ancient rice traders recommend trading this pattern?
Let’s find out.
How to Identify the Bullish Abandoned Baby Candlestick Pattern
The following are the requirements for a valid bullish abandoned baby candlestick pattern:
- The first candlestick must have a long bearish real body.
- The second candlestick must be a doji.
- There must be a downside gap where the wicks of the first and second candlesticks don’t touch.
- The third candle must be bullish 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 a downtrend.
The bullish abandoned baby appeared on the UBS Group’s (UBS) daily chart on August 3rd, 2012. The first candle is bearish in the direction of the current bearish trend. The second day gaps down from the first and forms a doji candle. The third day gaps up with a tall bullish candle that moves well within and above the first bearish candle. How do traders expect this specialized pattern to play out with the downtrend and the three bar pattern identified?
Let’s find out.
How to Trade the Bullish Abandoned Baby Candlestick Pattern
There is not enough data to determine how to trade the bullish abandoned baby candlestick pattern in a data-driven way. Most traditional technical analysts that study candlestick patterns recommend trading the pattern as a bullish reversal.
While this investment advice isn’t backed by statistical significance, the data seems to hint toward this direction.
So how do traders trade this pattern?
Let’s use the KB Financial Group’s daily chart as an example. We see that price is in a bearish trend. The first candle prints a large bearish candle. The following candle gaps down and forms a doji, meaning the opening and closing prices are almost equal. We see a sharp rise in the third candle that gaps above the second candle in the opposite direction completing the pattern.
With the pattern identified, traders look to buy a break of the third candle’s high, hoping the upward trending price will continue with a stop loss below the low of the second gapped down doji.
While this specific example could have resulted in either a profit or a loss, depending upon the profit target, how does this pattern typically play out?
Let’s look at the backtest results.
Does the Bullish Abandoned Baby Candlestick Pattern Work (Backtest Results)
Using the following rules, I backtested the bullish 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
Bullish Abandoned Baby Bullish Reversal Backtest Results
| crypto | forex | stock | |
|---|---|---|---|
| pattern_name | bullish abandoned baby | bullish abandoned baby | bullish abandoned baby |
| pattern_category | bullish reversal | bullish reversal | bullish reversal |
| pattern_bars | 3 | 3 | 3 |
| required_trend | downtrend | downtrend | downtrend |
| traded_as | bullish reversal | bullish reversal | bullish reversal |
| stop_bar_type | low | low | low |
| entry_bar_type | high | high | high |
| risk_reward | 0.0 | 0.0 | 3 |
| timeframe | 2015-2021 | 2010-2021 | 2000-2021 |
| bar_period | daily | daily | daily |
| total_tickers | 395 | 1351 | 6951 |
| pattern_tickers | 0.0 | 0.0 | 30 |
| patterns | 0.0 | 0.0 | 63 |
| trades | 0.0 | 0.0 | 41 |
| confirm_perc | 0.0 | 0.0 | 0.65 |
| wins | 0.0 | 0.0 | 14 |
| losses | 0.0 | 0.0 | 27 |
| win_perc | 0.0 | 0.0 | 0.341 |
| avg_win_bars | 0.0 | 0.0 | 13.79 |
| avg_loss_bars | 0.0 | 0.0 | 17.11 |
| cons_wins | 0.0 | 0.0 | 3 |
| cons_losses | 0.0 | 0.0 | 2 |
| edge | 0.0 | 0.0 | 0.363 |
| crypto | forex | stock | |
|---|---|---|---|
| pattern_name | bullish abandoned baby | bullish abandoned baby | bullish abandoned baby |
| pattern_category | bullish reversal | bullish reversal | bullish reversal |
| pattern_bars | 3 | 3 | 3 |
| required_trend | downtrend | downtrend | downtrend |
| traded_as | bullish reversal | bullish reversal | bullish reversal |
| stop_bar_type | low | low | low |
| entry_bar_type | close | close | close |
| risk_reward | 0.0 | 0.0 | 3 |
| timeframe | 2015-2021 | 2010-2021 | 2000-2021 |
| bar_period | daily | daily | daily |
| total_tickers | 395 | 1351 | 6951 |
| pattern_tickers | 0.0 | 0.0 | 30 |
| patterns | 0.0 | 0.0 | 63 |
| trades | 0.0 | 0.0 | 48 |
| confirm_perc | 0.0 | 0.0 | 0.76 |
| wins | 0.0 | 0.0 | 16 |
| losses | 0.0 | 0.0 | 32 |
| win_perc | 0.0 | 0.0 | 0.333 |
| avg_win_bars | 0.0 | 0.0 | 12.75 |
| avg_loss_bars | 0.0 | 0.0 | 16.75 |
| cons_wins | 0.0 | 0.0 | 3 |
| cons_losses | 0.0 | 0.0 | 2 |
| edge | 0.0 | 0.0 | 0.329 |
Bullish Abandoned Baby Bearish Continuation Backtest Results
| crypto | forex | stock | |
|---|---|---|---|
| pattern_name | bullish abandoned baby | bullish abandoned baby | bullish abandoned baby |
| pattern_category | bullish reversal | bullish reversal | bullish reversal |
| pattern_bars | 3 | 3 | 3 |
| required_trend | downtrend | downtrend | downtrend |
| traded_as | bearish continuation | bearish continuation | bearish continuation |
| stop_bar_type | high | high | high |
| entry_bar_type | low | low | low |
| risk_reward | 0.0 | 0.0 | 3 |
| timeframe | 2015-2021 | 2010-2021 | 2000-2021 |
| bar_period | daily | daily | daily |
| total_tickers | 395 | 1351 | 6951 |
| pattern_tickers | 0.0 | 0.0 | 30 |
| patterns | 0.0 | 0.0 | 63 |
| trades | 0.0 | 0.0 | 33 |
| confirm_perc | 0.0 | 0.0 | 0.52 |
| wins | 0.0 | 0.0 | 3 |
| losses | 0.0 | 0.0 | 30 |
| win_perc | 0.0 | 0.0 | 0.091 |
| avg_win_bars | 0.0 | 0.0 | 1.0 |
| avg_loss_bars | 0.0 | 0.0 | 0.0 |
| cons_wins | 0.0 | 0.0 | 1 |
| cons_losses | 0.0 | 0.0 | 2 |
| edge | 0.0 | 0.0 | -0.637 |
| crypto | forex | stock | |
|---|---|---|---|
| pattern_name | bullish abandoned baby | bullish abandoned baby | bullish abandoned baby |
| pattern_category | bullish reversal | bullish reversal | bullish reversal |
| pattern_bars | 3 | 3 | 3 |
| required_trend | downtrend | downtrend | downtrend |
| traded_as | bearish continuation | bearish continuation | bearish continuation |
| stop_bar_type | high | high | high |
| entry_bar_type | close | close | close |
| risk_reward | 0.0 | 0.0 | 2 |
| timeframe | 2015-2021 | 2010-2021 | 2000-2021 |
| bar_period | daily | daily | daily |
| total_tickers | 395 | 1351 | 6951 |
| pattern_tickers | 0.0 | 0.0 | 30 |
| patterns | 0.0 | 0.0 | 63 |
| trades | 0.0 | 0.0 | 55 |
| confirm_perc | 0.0 | 0.0 | 0.87 |
| wins | 0.0 | 0.0 | 3 |
| losses | 0.0 | 0.0 | 52 |
| win_perc | 0.0 | 0.0 | 0.055 |
| avg_win_bars | 0.0 | 0.0 | 1.0 |
| avg_loss_bars | 0.0 | 0.0 | 0.0 |
| cons_wins | 0.0 | 0.0 | 1 |
| cons_losses | 0.0 | 0.0 | 3 |
| edge | 0.0 | 0.0 | -0.83 |
Bullish Abandoned Baby Mean Reversion Backtest Results
| crypto | forex | stock | |
|---|---|---|---|
| pattern_name | bullish abandoned baby | bullish abandoned baby | bullish abandoned baby |
| pattern_category | bullish reversal | bullish reversal | bullish reversal |
| pattern_bars | 3 | 3 | 3 |
| required_trend | downtrend | downtrend | downtrend |
| traded_as | bullish mean reversion | bullish mean reversion | bullish mean reversion |
| stop_bar_type | atr | atr | atr |
| entry_bar_type | pattern_low | pattern_low | pattern_low |
| risk_reward | 0.0 | 0.0 | 1 |
| timeframe | 2015-2021 | 2010-2021 | 2000-2021 |
| bar_period | daily | daily | daily |
| total_tickers | 395 | 1351 | 6951 |
| pattern_tickers | 0.0 | 0.0 | 30 |
| patterns | 0.0 | 0.0 | 63 |
| trades | 0.0 | 0.0 | 7 |
| confirm_perc | 0.0 | 0.0 | 0.11 |
| wins | 0.0 | 0.0 | 4 |
| losses | 0.0 | 0.0 | 3 |
| win_perc | 0.0 | 0.0 | 0.571 |
| avg_win_bars | 0.0 | 0.0 | 0.0 |
| avg_loss_bars | 0.0 | 0.0 | 1.0 |
| cons_wins | 0.0 | 0.0 | 1 |
| cons_losses | 0.0 | 0.0 | 1 |
| edge | 0.0 | 0.0 | 0.141 |
| crypto | forex | stock | |
|---|---|---|---|
| pattern_name | bullish abandoned baby | bullish abandoned baby | bullish abandoned baby |
| pattern_category | bullish reversal | bullish reversal | bullish reversal |
| pattern_bars | 3 | 3 | 3 |
| required_trend | downtrend | downtrend | downtrend |
| traded_as | bearish mean reversion | bearish mean reversion | bearish mean reversion |
| stop_bar_type | atr | atr | atr |
| entry_bar_type | pattern_high | pattern_high | pattern_high |
| risk_reward | 0.0 | 0.0 | 1 |
| timeframe | 2015-2021 | 2010-2021 | 2000-2021 |
| bar_period | daily | daily | daily |
| total_tickers | 395 | 1351 | 6951 |
| pattern_tickers | 0.0 | 0.0 | 30 |
| patterns | 0.0 | 0.0 | 63 |
| trades | 0.0 | 0.0 | 27 |
| confirm_perc | 0.0 | 0.0 | 0.43 |
| wins | 0.0 | 0.0 | 18 |
| losses | 0.0 | 0.0 | 9 |
| win_perc | 0.0 | 0.0 | 0.667 |
| avg_win_bars | 0.0 | 0.0 | 1.89 |
| avg_loss_bars | 0.0 | 0.0 | 3.78 |
| cons_wins | 0.0 | 0.0 | 2 |
| cons_losses | 0.0 | 0.0 | 2 |
| edge | 0.0 | 0.0 | 0.337 |
As mentioned previously, the data hints toward the pattern working in the stock market. We see that trading as a bullish reversal entering in on a break of the high or the close turns into a profitable position on average.
Trading the bullish abandoned baby as a bearish continuation loses money on close and low entries.
And the pattern does work in both ways as a mean reversion play.
In other words, the pattern works like most other reversal candlestick patterns that I’ve tested and reversed after a bout of volatility.
However, as I mentioned previously, I would recommend using additional trading indicators to increase the expectancy or, even better, skipping the pattern for a more reliable pattern altogether.
Similar Patterns
Multiple candlestick patterns are often confused with the bullish abandoned baby. It’s essential to understand the differences when using candlestick pattern technical analysis.
Bearish Abandoned Baby vs. Bullish Abandoned Baby
The bearish abandoned baby pattern and the bullish abandoned baby are mirror images of each other. The bearish abandoned baby occurs in an uptrend expecting a bearish reversal, while the bullish abandoned baby occurs in a downtrend expecting a bullish reversal.
The first candlestick of both patterns is a long-bodied candle in the direction of the existing trend. The second candlestick of the bearish abandoned baby gaps up while the middle candle of the bullish abandoned baby gaps down. Both patterns’ first and third candles print a strong advancing candle that moves in opposite directions.
Both patterns don’t have enough data to be traded in a statistically significant manner, but they both hint toward working as intended and reversing the existing trend.
Morning Doji Star vs. Bullish Abandoned Baby
The morning doji star candlestick pattern, different than the morning star pattern, is very similar to the bullish abandoned baby. The only difference is that the morning star does not have a downside gap while the abandoned baby does.
The Bottom Line
The bullish abandoned baby is a three bar reversal pattern that infrequently occurs in all markets I tested—the data hints toward the pattern working as a bullish reversal pattern in the stock market. Still, the data is insignificant, and other candlestick patterns are more profitable and reliable.
