The stock symbol UNG (United States Natural Gas Fund) is two candles into an abandoned baby pattern. Those of you that know this pattern, also know that it is very rare and very strong. Another possibility is the Morning Doji Star pattern, which is also a strong buy signal. Best of all, the doji was formed during a high volume trading day which means an upward gap would leave short sellers with losing trades. I hope this gaps way up for Tuesday so I can scoop it up.
Look for this pattern to complete itself by Monday. Resistance and stop loss for this trade are at $13.70 be sure to consider the risk before opening the trade. Update for this trade will be on Tuesday at around 3:00pm.
What is an Abandoned Baby Bottom?
An abandoned baby is a three candle pattern which works out like this.
Day 1 – Down day during a downward trend.
Day 2- Large downward gap forms a doji or spinning top whose shadows don’t overlap with first or third day’s
Day 3- Large upward gap and strong bullish candle which pierces well into the first day’s territory.
Stop Loss is set at the second day’s close/open.
This pattern works because the doji signals a slowing of momentum for the bears. Then the next day ann aggressive upward gap and bullish candle destroy what is left of the downward trend. This sudden shock can give way to both short and long term reversals.
