The “abandoned baby” pattern is rare and would anticipate a prolonged rally.
Strategy shares are “hit” by criticism of the business model and the decline in mNAV.
Shares of Strategy (MSTR), the largest corporate holder of bitcoin (BTC), recorded one of the rarest trend reversal patterns in technical analysis this week: the so-called “abandoned baby.”
This is a classic sign of possible reversion bullish, according to VanEck head of digital asset research Matthew Sigel. This is because the movement suggests that MSTR could have hit rock bottom after weeks of selling pressure.
The pattern is formed when a strong gap bearish is followed by a small isolated candle, and subsequently a gap bullish that leaves that candle “abandoned.” Confirmation of this occurs when the price returns above the previous range, something that MSTR achieved on December 3.
The following TradingView chart shows the break of the “abandoned baby” pattern after a period of intense fear in the market. The latter coincides with the fall of bitcoin from its all-time high of $126,000.
MSTR’s behavior comes as the company faces criticism over its business model. This, after the drop in the total value of that entity’s bitcoin reserves (mNAV) below 1.00, as reported by CriptoNoticias.
Despite the technical rebound, the sustainability of the movement of Strategy shares will largely depend on bitcoin’s recovery. This is because its price continues to react to macroeconomic factors and the reduction in global liquidity.
If the reversal is confirmed, The pattern could mark the beginning of a multi-month bullish cycle. Although the stock remains exposed to the volatility of the digital asset market.