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Chapter 9, Part IV. Single Candlestick Patterns. Page 3

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Rules of Hammer’s recognition:


    - The long lower shadow – at least 2 times longer (3 times or more is preferable) than the body;

    - Little or no upper shadow;

    - The body is at upper end of the candle (in fact it couldn’t be otherwise, due to previous conditions);

    - The color of the body is not important, but a white hammer is preferable.

    - Hammer also could be a Doji with the same properties (chart #2).


    #2 GBP/USD Weekly – Shooting star and Inversed Hammer:
    [​IMG]

    Hanging man, in fact, has absolutely the same properties, but in terms of bearish reversal pattern. Its appearance after up trend suggests that here could be a top or resistance level.

    Pipruit: Commander and what are the price mechanics of a Hanging man? Looks like the same action on a Hammer as on a Hanging man, buyers dominate over sellers. Why then is a Hanging man a bearish reversal pattern?​

    Commander in Pips: Good question. Imagine a good up move, so that the market is forming nice white up candles. But once, a Hanging Man has appeared. What does it mean? Although buyers have return to their positions during this period and have pushed the bears back – they could do it only until the open price and weren’t able to continue the up move, i.e. establish the next nice white candle. Hence, a Hanging Man gives us an early warning, that Buyers are gradually becoming exhausted, so the pressure of bears becomes stronger.

    Pipruit: Sounds logical.​
     
    #1 Sive Morten, Dec 15, 2013
    Lasted edited by : Feb 18, 2016
    Hamza Samiullah and fran alvarez like this.
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