Some Call It The Gap
Those who base their decisions on candlesticks to invest money online in Forex may have heard of the “abandoned baby” pattern. It’s often referred to as the GAP. This pattern is easily recognized because of the three features it showcases. It usually offers the first day closing price within a three day formation thus indicating the finalization of a downward trend; it usually shows that the currency closes at a lower value than when it opened. It shows the second day’s activities through a shadow dip which develops below the close of the prior day. And the third day features characteristics indicating that the closing prices took place above the open.
What we’ve described above is what happens when the currency is in a hawkish reversal towards the downside. It may also show a move to the upside when a doji or small candlestick appears on the chart. Remember that the most important charts are those within the bigger time frames as they offer important information in regards to the overall trend. However, one can’t ignore the data the smaller time charts offer. The wisdom in small time-frames is invaluable.
An abandoned baby tells you that the market has entered into reversal mode and may possibly start on a new trend; and as you’ll see the trend will go in the opposite direction due to the influx of hawks. The baby explains that the hawks may overtake the doves and the currency prices may climb.