Technician

Watch This Candle: #AUDJPY Hammer Weekly | #FOREX

Education
FX:AUDJPY   Australian Dollar / Japanese Yen
Introducing another posts type named " Watch This Candle", I will try to spot and explain the main important candlesticks patterns. I wish you like it. If you do please comment and agree so i continue...
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Candlestick Pattern: Hammer
Prior Trend: Down
Implications/Use: Bullish reversal, Bullish correction, good for scalping

Introduction
One of the most powerful tools in gauging shifts in market balances, the hammer candlestick pattern is one of the patterns I personally find extremely useful in the process of determining trend reversals.

Definition
There are plenty of candlestick patterns; however the hammer is of the most illustrative.
Hammer candles form when a security moves sharply lower after the open, but rebounds to close significantly above the low of the session.

The shape

The Hammer has a long lower shadow with a small body, the lower shadow should at least be double the size of the body, and the body can be green(up) or red(down), however through my experience I find the ones with green body more reliable.

The Hammer should be preceded by a clear downtrend or at least several down days.
Note: breakouts below the low of the hammer usually lead to further bearish movement, and confirms bearish continuation.
$$ It's strongly recommended to always use candlestick patterns in conjunction with other technical tools to increase the chances of success. For example, a hammer near a support level or the 50-days Simple Moving Average .
Note: breakouts below the low of the hammer usually lead to further bearish movement, and confirms bearish continuation
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Comments

I will remove the shooting star part of this post, and post a totally different post on shooting star. But basically its the opposite.. Always use candlestick patterns in conjuction with other technical tools to enhance your chances...
+1 Reply
jangseohee Technician
100% agree using candlesticks MUST be coupled with other weapon :-)
+1 Reply
The shooting star has the opposite shape as a hammer. That means the upper shadow is very long and more than twice the length of the small body. Which means that during the course of the trading session, the vehicle traded much higher than the open but then closed much lower and closer to the open. It is bearish since sellers are in control towards the close. I agree that candles are a very useful indicator of short term turning signals. Please continue. It would be very useful if we can help to spot turning candles. Both the DOW and the SPX printed bullish engulfing patterns today which is one of the strongest turning signals.
+1 Reply
Technician Will Wong
Thanks will continue, I will post another post for the shooting star candle..
Reply
Barabaszek Will Wong
Reply
jangseohee Barabaszek
it see it as piercing, but its ok
Reply
Hi technician, on a daily/intraday base it could really be an upside trade.
But when i look back, it actually looks like a struggling hanging man on the way down? perhaps i am wrong
Ouch, feels like my balls are about to get squeeze hard LOL
+1 Reply
Will Wong jangseohee
Hangman are shaped like a hammer but appear at the top of an uptrend and bearish but less so than a shooting star.
Reply
justatrader jangseohee
Jangseohee.. You shouldn't take single candlestick patterns like hanging man or hammers in isolation. In fact never take candlesticks in isolation. Look at support/resistance levels where they appear. That is when they are the most powerful. If you want to practice candlesticks & S/R, I suggest you do some demo trading with Nikkei225. Its by far the best asset I have seen that brings many candlestick patterns (both successful & failed).
+1 Reply
Technician justatrader
Totally agree abt taking candles in isolation.. Always use this tool along with other tools. This post is just meant to be an explanation of the hammer candle.. I am adding to the description this part, thanks for reminding me justatrader..
+1 Reply
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