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Chapter 9, Part IV. Single Candlestick Patterns. Page 4

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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    Commander in Pips: Thank you. As with a Hammer – we should not sell blindly when a Hanging Man just appeared. Much better is to wait some confirmation from further price action - close below the open/low price of candle that preceded appearing of Hanging Man pattern, or at least the lows of the Hanging Man pattern itself. Also it’s impossible to say – does the Hanging man show a long-term top and lead to reversal or indicate just short-term bouncing from resistance.

    We should treat this pattern as failing if the market will close above the highs of Hanging Man.


    Rules of Hanging Man recognition:


    - The long lower shadow – at least 2 times longer (3 times of 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 black Hanging Man is preferable.

    - Hanging Man also could be a Doji with the same properties.


    Inverted Hammer and Shooting Star


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    If we turn a Hammer or a Hanging Man from top to bottom – we will get other reversal patterns – Inverted Hammer and Shooting Star. The properties of these patterns include very long upper shadow, small body (black or white), and small or even absence of lower shadow.

    Pipruit: Well, I suppose, that an Inverted hammer corresponds to a Hanging Man, but appears after down move and tells about possible bottoms and support area. While a Shooting Star corresponds to Hammer, but appears after an up move and tells about a possible downside reversal or resistance area. We can make such conclusion due price action during these patterns.​

    Commander in Pips: You’re absolutely right. You even can find Inverted Hammer on Chart #1 two candles to the right from just Hammer. In this case appearing of inverse hammer near to ordinary hammer confirms the strength of support. If you’re so smart – explain me the market mechanics during Inverted Hammer and how to recognize it and trade.
    #1 GBP/USD Weekly Chart – Hammer and Hanging Man examples

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    #1 Sive Morten, Dec 15, 2013
    Lasted edited by : Feb 18, 2016
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