Abandoned Baby Forex Trading Strategy

The Abandoned Baby forex trading strategy is a 3-bar price action pattern that is quite reliable and takes shape on the activity chart after a steep decline or rise.

Although this pattern is quite rare, when it does occur, it connotes a rapid shift in momentum from bears to bulls or vice versa.

Chart Setup

MetaTrader4 Indicators: Bear_Bulls_Power.ex4 (default setting), Binaryarrows.ex4 (default setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Download the Abandoned Baby Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy entry in the market if the following indicator or chart pattern gets displayed:

  1. If the Bullish Abandoned Baby price action depicted by candlestick 1, 2 & 3 forms after a steep decline, a bullish trend is imminent i.e. a buy signal for the currency in focus.
  2. If the green histogram of the Bear_Bulls_Power.ex4 custom indicator aligns above the 0.00 signal level as shown on Fig. 1.0, price is said to be pushed higher i.e. a buy alert.
  3. If the aqua upward pointing arrow of the Binaryarrows.ex4 custom indicator forms below price bars as shown on Fig. 1.0, the market sentiment is said to be somewhat bullish i.e. a buy alert.

Stop Loss for Buy Entry: Place stop loss 2-5 pips below the patterns’ low.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions are in place:

  1. If the Bear_Bulls_Power.ex4 custom indicator forms a red histogram below the 0.00 signal level, it is an indication of an imminent reversal from the current trend, hence an exit or take profit is advised.
  2. If a red downward pointing arrow of the Binaryarrows.ex4 custom indicator forms above the candlesticks as displayed on Fig. 1.0, it is price making a U-turn from its earlier trend, hence an exit or take profit is recommended.

Sell Entry Rules

Enter a sell order if the following holds true:

  1. If the Bearish Abandoned Baby price action depicted by candlestick 1, 2 & 3 forms after a sharp rise, a bearish trend is imminent i.e. a sell trigger for the pair in focus.
  2. If the red histogram of the Bear_Bulls_Power.ex4 custom indicator forms below the 0.00 signal level as depicted on Fig. 1.1, price is said to be pushed lower i.e. a sell alert.
  3. If the red downward pointing arrow of the Binaryarrows.ex4 custom indicator forms above price bars as shown on Fig. 1.1, the market sentiment is said to be somewhat bearish i.e. a sell signal.

Stop Loss for Sell Entry: Place stop loss 2-5 pips above the patterns’ high.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following chart or indicator pattern are on display:

  1. If the Bear_Bulls_Power.ex4 custom indicator forms a green histogram above the 0.00 signal level, it is a trigger to exit or take profit at once.
  2. If an aqua upward pointing arrow of the Binaryarrows.ex4 custom indicator forms below the candlesticks as shown on Fig. 1.1, an exit or take profit is advised.

Sell Trade Example

Fig. 1.1

Free Download

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About The Trading Indicators

The Bear_Bulls_Power.ex4 custom indicator can be deployed to gauge the strength of the bulls and bears in the market and also offers alert to potential breakout.

The binaryarrows.ex4 is a trend following indicator that displays an aqua (bullish trend) or red (bearish trend) colored arrows below or above price bars respectively.

The abandoned baby price action pattern is a 3-bar reversal pattern that is not too common, but does pop on the chart following a sharp rise or a steep decline.

Its basic setup includes an initial bullish bar, a doji, and a last bar that is bearish (opening somewhat below the second bar, thus depicting the change in market sentiment), whereas the bullish abandoned baby price action pattern is the opposite of the aforementioned.

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