Abandoned Baby - Bearish
A bearish abandoned baby is a specific candlestick pattern that often signals a downward reversal trend in terms of security price. It is formed when a gap appears between the lowest price of a doji-like candle and the candlestick of the day before. The earlier candlestick is green, tall, and has small shadows. The doji candle is also tailed by a gap between its lowest price point and the highest price point of the candle that comes next, which is red, tall and also has small shadows. The doji candle shadows must completely gap either below or above the shadows of the first and third day in order to have the abandoned baby pattern effect.
Traditionally, this candlestick pattern is recognized in conjunction with a specific trend direction, i.e. it might be important for the pattern if the price has been generally going up or down. The ‘Detect Trend Based On’ option allows you to specify which of the following methods to use to detect the trend:
- SMA50 - the indicator compares the current price of the symbol to its Simple Moving Average (SMA) with the length of 50. If the current price is below the SMA, this price movement is considered a downtrend. If the price is above the SMA, it is an uptrend.
- SMA50, SMA200 - the indicator separately compares the current price to the SMA50 and the SMA50 to SMA200. If the current price is above the SMA50 and SMA50 is above SMA200, this is considered an uptrend. If the price is below SMA50 and SMA50 is below SMA200, this is a downtrend.
- No detection - the indicator does not take price trend into account.
By comparing two different SMAs, the 'SMA50, SMA200' option only detects stronger trends. When the trend is weak and the condition above is not met, no patterns will be detected. In contrast, the 'SMA50' option will also detect weaker trends.