justatrader
Short

Finally some USD Shorts to look forward to

INDEX:DXY   U.S. Dollar Index
1472 38 10
Weekly candlestick forms a nice hanging man. What makes this an interesting candlestick pattern is the way it gapped up before closing lower.

Secondly, the price level of 94.76 is an unfilled down gap from 22/09/2003.

The US Dollar             has enjoyed a rally for quite some months, to the point that USD long position has become a boring proposition. So we're looking for a change of trend.

Best course of action is to wait for this week's candlestick to close bearish for confirmation or look for daily charts bearish candlestick pattern for an earlier confirmation.
Professional market analyst with a keen interest on futures. Love keeping an eye on the markets. Currencies, bonds, commodities. Combining technical analysis and the fundamentals. Contact me for more details.

Rebounds

I believe that the hanging man is the most misunderstood candlestick of all. Whenever I see a hanging man, I am bullish. That's my personal interpretation.
+1 Reply
justatrader PRO vlad.adrian
2 years ago
Agree that candlestick patterns on its own isn't a good trade signal, but when they appear near key levels, that's when they manifest themselves. Although its always best to move one TF lower and short on a bearish pattern (pref. DCC or bearish engulfing)

Here's a NASDAQ monthly hanging man. At least it made me a good bit of money in January. HM at a key resistance level.
NASDAQ100 CFD Analysis (Hanging man on top)
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jangseohee vlad.adrian
2 years ago
Hi Vlad teacher,
i am not disagreeing that Hanging Man is bullish. Perhaps a transient bullishness
Example:
I observed that FTSE 100 index have double Hanging Man that "hung" the index to major correction or collapse
snapshot
+1 Reply
justatrader PRO jangseohee
2 years ago
I think its easy to see why Vlad thinks hanging man is bullish. If you look at the chart I posted, on 12/8/2014 there was a bearish engulfing which turned back to a bullish continuation. As with candlestick patterns, I have repeated many times here and will do so once again. Taken in isolation, candlestick patterns give a 50 - 50 chance. Combine it with support/resistance and trend lines, and that's where they really shine. But again, its not that simple to just short on a hanging man at a resistance level for example. One needs to go a TF lower in order to see what's happening. So the above chart should be used as a guide for shorting USD based off Daily charts bearish candlestick pattern (which shows confluence with the weekly's bearish hanging man).
+1 Reply
vlad.adrian PRO justatrader
2 years ago
I agree with that but I think you are misunderstanding my point. I am not saying that candlesticks are useless when taken by themselves, or that they are strong when taken into consideration with another bunch of facts (although that is how I use them too, but I am sure there are other ways to use them). My point is about the hanging man and that's it. In the textbook it says that the hanging man represents a fall in price and then a rally made by inexperienced traders/investors that saw a decline and decided to jump on the ship. That's the short definition in my own words. There are a few problems with that:
1 - from what I've seen until now, inexperienced traders buy breakouts, and whenever a decline occurs, they think it is the end of the trend. They do not tend to jump on corrections (if they would, they would make money in the markets, most certainly). This is a personal opinion.
2 - secondly, if you go in the depth of the candle, it means that at a certain point in time (this is a weekly chart, I will use it as an example), lets say on Tuesday, people were bearish on the dollar, but then by the end of the week, the bearishness vanished and professionals closed the week near the open. This is absorption. The selling pressure has been absorbed, short positions have been taken out due to the rally at the end of the week, weak longs have been shaken out by the fall at the beginning of the week. Something being bearish for some time and then at the end of the week turning bullish... that is not bearish to me.

Of course this doesn't happen all the time, and I wouldn't use a monthly chart as a starting point for a study. The month is too long, many things can happen. I for one, use the monthly chart only to look where price stands in comparison with the past years. I do not use any technical analysis on it (looking at a chart is technical analysis and all that nonsense that someone would say just to prove how wrong I am.... you got my point).
There is a concept very unfamiliar to so many people, and that is absorption. I recommend to read David Weis' book, which is a modern adaptation to the Wyckoff method. Wyckoff was the first to introduce the concept of absorption. The first sign of absorption is the hanging man candlestick.

Now you guys provided some chart examples. The problem with that is that both of you look at the top for hanging man candlesticks. I encourage you to scroll back a bit, and highlight all the hanging man candlesticks on the chart, that means the ones that didn't play out by the book should be in there too. Also jangseohee, you should study the difference between a hanging man and a hammer, because you got them wrong. Some candles you highlighted took place after bearish candles, and although it can't be called a downtrend, a candle like that after a bearish candle is more of a hammer rather than a hanging man. However, no matter how you call it, it is bullish.
+1 Reply
vlad.adrian PRO vlad.adrian
2 years ago
An example of how bearish hanging man candlesticks are! I bought mostly all of the ones on USDSEK (charts are posted)
snapshot
+1 Reply
justatrader PRO vlad.adrian
2 years ago
sorry, none of those qualify as a hanging man in my book!!!
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vlad.adrian PRO justatrader
2 years ago
Actually, they do http://www.investopedia.com/terms/h/hangingman.asp
They seem they are not hanging man candlesticks because they didn't work out... This is the problem when looking back at a chart. If you are not completely detached, you are likely to look only at the signals that worked out, and ignore the rest. As I have said in a comment below, you are free to understand whatever suits you from technical analysis, just as I understand this candle signal as a bullish signal, and there is absolutely nothing wrong with my way or your way.
+1 Reply
justatrader PRO vlad.adrian
2 years ago
Hindsight or not, those candlestick pointed out don't fall under the hanging man category. And as a general rule if in doubt, wait for the next candle to close lower. Also, common with hanging mans and other top or bottom reversal candlesticks (single) is that price tends to spike higher or lower before resuming the reversal. You might call it stop hunting. There are some good candlestick patterns and there are some regular candlestick patterns.

And yeah, i'd take your longs any day on this hanging man.

I'm not sure why i keep commenting when I shouldn't. Obviously you have your opinion and I have mine. So let's agree to disagree on this and revisit next week to see how it turns out.
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justatrader PRO vlad.adrian
2 years ago
USDSEK send arrow from right "might" qualify as a hanging man, but it is a weak pattern because it remains well within the previous week's high. Compare that to the current USDX's hanging man and you'll see the difference.
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justatrader PRO vlad.adrian
2 years ago
"Now you guys provided some chart examples. The problem with that is that both of you look at the top for hanging man candlesticks. I encourage you to scroll back a bit, and highlight all the hanging man candlesticks on the chart, that means the ones that didn't play out by the book should be in there too."

Yes, that's a favorite past time of mine. To simply look at candlesticks and see how price reaction. (Which is i why I mentioned that bullish/bearish engulfing pattern from 12/01 - 12/15.) and this is what you are implying to as well, which brings us back to the same old point. Candlesticks in isolation = 'nothing'

1. And in this analysis, if I see a weekly hanging man near a multi year old unfilled gap, I know its time to push lower. But does that mean short USD on Monday morning? No.

Its more of a reminder to be cautious on existing long positions (or when taking new long positions).

Candlesticks are nothing by traffic signal lights. One can either close their eyes and hit the pedal because the light turned green (and risk getting hit by a reckless driver) or proceed with caution.

2. Talking purely of hanging man, there is a lot of difference. Ex: 2014/10/06 could qualify as a hanging man, but its nothing extra ordinary. What makes this hanging man extra ordinary is the above mentioned unfilled gap + a higher open from previous week's close.

Anyway, i rest my case. If you make money going bullish on the hanging man, good on you.
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vlad.adrian PRO justatrader
2 years ago
Looking at the gap, at the depth of the hanging man, at the height... these are all details. I just wanted to share my point of view, everyone is free to understand whatever they want from a technical analysis pattern.
+1 Reply
jangseohee vlad.adrian
2 years ago
Vlad, i value your feedback :-)
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vlad.adrian PRO jangseohee
2 years ago
I'm glad to hear that :)
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aziz92 vlad.adrian
2 years ago
"Now you guys provided some chart examples. The problem with that is that both of you look at the top for hanging man candlesticks. I encourage you to scroll back a bit, and highlight all the hanging man candlesticks on the chart, that means the ones that didn't play out by the book should be in there too. "

Well said.
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Picolo aziz92
2 years ago
yeah it's going to the moon then, ROFL
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justatrader PRO vlad.adrian
2 years ago
Still bullish?
+2 Reply
jangseohee justatrader
2 years ago
50% of the green bar and it shoot to the sky :-)
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vlad.adrian PRO justatrader
2 years ago
Typical comment on Tradingview... The dollar is down 0.70% today and you are very excited that your hanging man 'proved' right. I remind you that you posted a weekly chart, and 0.70% is close to nothing. Yes I am still bullish on the dollar, and I will buy a retracement. Instead of trying to prove me wrong, I invite you to check my trades that you can find in my published charts. You will find there lots of long dollar trades, probably with an accuracy of 95%.
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justatrader PRO vlad.adrian
2 years ago
So you're a mod eh!!! Yea, the week is not over yet, and in all likelihood you probably aren't even putting your money in the dollar. Who knows. And thanks but no thanks got better things than to prove a point. Good luck and godspeed.
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vlad.adrian PRO justatrader
2 years ago
'Still bearish'? See why it is not a good idea to try and seem smart? The market might prove you wrong. I just wanted to point out to you and other traders another way of using a popular candle pattern that I do not find effective. Instead of saying 'ok, that's a way to look at it' you decided to throw it in my face when the dollar was down. A real trader never does that. A real trader understands that there are more ways of playing the market. A real trader knows to listen, but trusts his methods. You on the other hand, got excited when you saw the dollar squeeze and decided it is a good idea to mock me. I kept calm, adjusted my portofolio, and today I bought even more dollars. I hope you can learn something from this episode and this conversation, and never mock another trader's trades or system. Also, the fact that you accused me of lying that I have money on the long side of the dollar is just infantile. I do have money on the long side, because that is the place to have money right now, and no matter the outcome, I know I am doing the right thing. In my opinion, it would be nice to hear you admitting your mistake and making an apology.
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SenthilKumar vlad.adrian
2 years ago
my friend, his view is not proved wrong yet as the price is still below his pivot, and also you are not proved right either... so dont start your lecture yet... if you think market is going to prove him wrong... you think the market will always prove you are right ..?
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jangseohee vlad.adrian
2 years ago
Vlad, it is NEVER my intention to mock at anyone here. If a trade turn against me, so be it
or prove to anyone that my system works all the time..
Candles are built differently at different point, i believe each and everyone of here trade based on our own interpretation of candles. It is just an open discussion
Have good weekend :-)
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vlad.adrian PRO jangseohee
2 years ago
My comment was not meant for you. In your notification box you get vlad replied to your comment because you are part of the conversation, but my reply was not meant for you, it was meant for the publisher of this chart.
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justatrader PRO vlad.adrian
2 years ago
Vlad gets happy on a doji after a hanging man in an uptrend and expects an apology because he thinks a hanging man is bullish.

Well, ok. I'm sorry vlad, for arguing with a fool who is married to his position.

The markets will settle this sooner than later. Worst case, i'll be left with a good lesson in price action with my equity intact. Have you considered your worst case situation since you mentioned you were long?

Why not work on that instead of dragging this pointless argument on and on.
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vlad.adrian PRO justatrader
2 years ago
I get excited because I look at what caused that doji ;)
The only thing to do right now is to buy dollars. Doesn't matter if the market will go up or down, it is the logical action to take right now. I am not married to my position, I am married to the excellent US economy and the Fed. The Fed is the only bank talking about raising rates, but hey, we are all technical analysts right??? Well, these are the times when technical analysis fails, and the weakest patterns are the first to fail. It's a pitty that you call me a fool, other users did when the DXY was at 86 and I was bullish ; what a fool I've been! Lets close the argument, I see no reason for you to argue or have a conversation with a fool.
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vlad.adrian PRO justatrader
2 years ago
How are the dollar shorts going for you? I'm glad I got happy on a doji :).
+1 Reply
justatrader PRO vlad.adrian
2 years ago
Welcome back to the thread. Good to see this trade has caught your fascination that you keep coming back and i'm sure you did almost every other friday, lol! And if you must know, shorts were closed two weeks after. Maybe you don't pay attention much.
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vlad.adrian PRO justatrader
2 years ago
Of course this trade caught me, I have about 700% exposure to dollar longs.
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justatrader PRO vlad.adrian
2 years ago
I did figure that out. Else no one would get so sticky with the analysis. Its always those who have a steady position that often come out to defend another point of view. Anyways, if the discussion was a lot more civil minus the sarcasm, this would have been a good discussion on candlestick patterns, and probably that's what i'll take away. But of course, as price didn't move much the next week (which made me look to the daily charts) and the third week closing bearish but no so much during that week, it was probably a safe exit in hindsight.
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vlad.adrian PRO justatrader
2 years ago
I did say from the beginning I have a position in USD, and you turned this discussion when you made that smugg comment when the dollar squeeze took place. Maybe this will be a lesson for you to stop fighting the dollar bull trend. No matter what correction will come, the trend is up and your money should be on the long side. I've been saying this since November, and you weren't the only one arguing with me. Time has proven common sense right. It is common sense to buy the dollar. You don't have to be a genius to see that.
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justatrader PRO vlad.adrian
2 years ago
Dollar Index - Enter consolidation
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justatrader PRO vlad.adrian
2 years ago
Go easy on the Vodka
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vlad.adrian PRO justatrader
2 years ago
:)) No reason to party, I didn't manage the position properly.
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sigmadict
2 years ago

"DEFINITION OF 'HANGING MAN'
A bearish candlestick pattern that forms at the end of an uptrend. It is created when there is a significant sell-off near the market open, but buyers are able to push this stock back up so that it closes at or near the opening price. Generally the large sell-off is seen as an early indication that the bulls (buyers) are losing control and demand for the asset is waning. "
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sigmadict sigmadict
2 years ago
This formation does not mean that the bulls have definitively lost control, but it may be an early sign that the momentum is decreasing and the direction of the asset may be getting ready to change. The reliability of this signal is drastically improved when the price of the asset decreases the day after the signal. Hanging man formations can be more easily identified in intraday charts than daily charts and are a very popular formation used by day traders.

If this pattern is found at the end of a downtrend, it is known as a "hammer".
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sigmadict
2 years ago
That is my chart on the topic ! :)
UUP Technicals
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sigmadict
2 years ago
UUP Technicals
UUP Technicals
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