Quote from hopy:
EUR
Bearish DIH
17:38 Sell 1.2137(2)
17:41 Buy 1.2147(2) Stopped out
http://www.elitetrader.com/vb/attachment.php?s=&postid=950810
Hi Hopy,
I just noticed something odd about your chart...
The time set of intervals are set differently than the CME time set for EuroFX EC.
That produces different candlestick patterns.
It looks like your data provider has changed to interval so that the 1/2 hour is an even number whereas in reality the EuroFX is 0829am, 0859am, 0929am, 0959am, 1029am and so on.
If your getting 0900am, 0930am, 1000am, 1030am then its not the correct interval setting for EuroFX EC.
Thus, producing different candlestick patterns on the 3min chart.
Some data providers do that so that
all their data has the exact same interval time set.
They usually do this by changing the Opening time of the instrument after its normal maintenance time.
Another trading instrument I see this done in error is CBOT trading instruments like mini-sized Dow YM and the Treasury Futures.
Most institutions, professional firms and all the higher end data vendors are using 0829am, 0859am, 0929am, 0959am, 1029am and so on.
Simply, when trading via candlestick patterns...try to use a data vendor that doesn't
alter the start times nor interval time sets.
However, is you prefer that data vendor than your going to need to understand the price action prior to the candlestick pattern.
With all that is said...lets take a closer look at the price action prior to your Dark Inverted Hammer.
First of all, its easy to get the Bearish Dark Shooting Star and the Bearish Dark Inverted Hammer
reversal patterns confused.
The Dark Shooting Star has a lower reliability than the Dark Inverted Hammer because there are often rising white lines between the White WRB and the Dark Shooting Star.
Simply, when we see those white lines its a good indication that buyers are brave and willing to push this higher especially when those white lines have long lower shadows.
However, with the Bearish Dark Inverted Hammer
reversal pattern we don't want to see that if there are no dark lines between the White WRB and the Dark Inverted Hammer...
The high of the Dark Inverted Hammer cannot be higher than the highs of any White Lines between the White WRB and the Dark Inverted Hammer to prevent from behaving like a Dark Shooting Star (low reliable pattern).
Therefore, I'll reveal a rule that differentiates the two:
* If there are no dark lines among the intervals between the White WRB and the Dark Inverted Hammer...
High of Dark Inverted Hammer must be < or = to the Highs of all the white candlestick lines between the White WRB and the Dark Inverted Hammer.
-------------------
I'll also
re-mention a prior rule discussed in this thread about the dark lines because its a key part of this message post.
* If there are dark lines among the intervals between the White WRB and the Dark Inverted Hammer...
Close of Dark Inverted Hammer must be < Close of the
most recent dark line to the Dark Inverted Hammer.
--------------------
The price action above ensures that the demand is either declining or exhausted (lost its upside momentum).
It also ensures that the Dark Inverted Hammer has closed below any candlestick s/r levels that may be present among those intervals between the White WRB and the Dark Inverted Hammer line.
This puts the odds in our favor when trading Bearish Dark Inverted Hammers in comparison to Bearish Dark Shooting Stars.
Once again, be careful about those white lines with long lower shadows (buyers showing up) when there are no dark lines between the White WRB and Dark Inverted Hammer.
Last of all, I've attached a chart of a Bullish White Hammer
continuation pattern on EuroFX EC 3min chart and you will be able to see the interval time set difference in our charts that didn't produce a pattern signal for you and that didn't produce the Dark Inverted Hammer for me as it did on your chart.
Bullish White Hammers can be either a reversal or continuation pattern signals
In this particular chart the profit target 1 (pt1) occurred via the 3min pattern signal chart and pt2, pt3 via the 5min chart interval.
Thus, continuation pattern signals is a good time to increase the chart interval for pt2 and higher due to its trading with whatever trend you've identified and you want to exploit that trend as much as possible.
Mark
(a.k.a.
NihabaAshi) Japanese Candlestick term
