Bearish Abandoned Baby
Reference values based on Bulkowski's "Encyclopedia of Chart Patterns". Data is primarily from U.S. markets and may differ for other markets.
An extremely rare three-candlestick pattern that appears at the top of an uptrend. After the first large bullish candle, a doji appears with a gap up, followed by a large bearish candle with a gap down. This is an enhanced version of the Evening Star, where the second doji must have complete gaps separating it from both adjacent candles. Although its frequency is low, it is a very powerful reversal signal.
Enter short at the open of the next candle after the third large bearish candle is confirmed. Verify that the third candle has declined to at least the midpoint of the first candle's body. Since this pattern is extremely rare, be vigilant not to miss it.
Project the total range of the pattern (from the second candle's high to the first candle's open) downward from the third candle's close to determine the price target. Larger moves than an Evening Star can be expected.
Place a stop-loss slightly above the high of the second doji. If the gap is filled, consider the pattern failed.
Ideally, volume is high on the first candle, decreases significantly on the second doji, and surges on the third candle. A volume spike on the third candle indicates strong selling pressure.