Hammer Candle Stick Chart Pattern

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Hammer Candle Stick Chart Pattern

Effects of Hammer

The Hammer indicates that the last downtrend is about to end and also might reverse with an uptrend or move sideways. This excellent pattern is an sign of the financial instrument’s SHORT-TERM view.

Story

The Hammer is characterized by a small Real Body near the top of the price range. The Real Body can be black or white, although a white candlestick is preferable. A white candlestick is slightly more bullish since it shows that the market sold off sharply during the session and then rebounded to close slightly above the opening price level. The Hammer has a long Lower Shadow and an Upper Shadow that is very small or non-existent.

Trading Factors

In cases  just where a major uptrend accompanied by a Hammer exists, the investor should consider vacating short opportunities.

Factors that Support

• A Hammer can be confirmed from a bullish gap between the Actual Body of the Hammer and additionally the open upon the next session. In different phrase, the investor must seek out the next session orifice greater than the actual Body of the Hammer. The elevated the gap, the more potent the alert.
• The Hammer can be stronger if in case the subsequent session shows a processed Real Body having a close above the close of the Hammer.
• A Hammer is much more significant if it is followed within the following session by yet another Hammer with superior qualities.
• Layouts with greater Lower Shadows have greater significance.
• The lighter the Real Body as well as the Upper Shadow the better the significance of the pattern.

Factors which Oppose

• It is vital to view tells in the context of last price action. If in case the downtrend is powerful and additionally indeed there are major bearish signs prior to the Hammer, then your Hammer may well not work. In this instance, it may be better to delay for bullish confirmation right before acting.
• The downtrend might continue to be in demand if or when the next session opens up lower than the Real Body of the Hammer.
• A Hammer having a black colored Actual Body (just where the open is high than the close) may indicate tiredness within the pattern.

A long Lower Shadow along with the positioning of the actual Body close to the top of the number are really both evidences which the bears could not maintain brand new lows. This creates the bullish situation.

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