The Abandoned Child is a reversal pattern. Like all reversal patterns in technical analysis, the Abandoned Child reverses the current trend, regardless of its direction.
The Abandoned Child depicts a lonely, abandoned small Japanese Doji candlestick, which is where the name comes from.
Characteristics of the figure Abandoned Child:
The abandoned child is a reversal figure. Like all reversal patterns in technical analysis, the abandoned child reverses the current trend, regardless of its direction.
The Abandoned Child consists of three candles, the middle of which is necessarily a doji, and on the sides - long candles of different colours, while the price wraps around the arc, and the shadows of any two neighbouring candles are separated by a window.
In more detail, the Abandoned Child consists of candles with the following parameters:
- Long white candle: the first candle in the pattern should be relatively long;
- Doji, through the window: there should be a noticeable window (gap) between the shadows of the first candle (long white candle) and the second candle (doji);
- Long black, through the window: there should be a noticeable window between the shadows of the doji and the third candle;
Bullish and Bearish "Abandoned Child".
It is important to note that the above-mentioned figure is only one type of abandoned child, namely a bearish abandoned child, because the price falls after the end of the figure.
If the figure is inverted, it is called a bullish abandoned child, and consists, respectively, of a long black, a doji through the gap, and a long white through the gap.
Applied meaning of the figure
After the formation of the figure, you should wait for about 2 more candles to confirm the trend reversal, and then act. If the figure has broken an important long trend with the third candle, the validity of the figure increases and it is not necessary to wait.
