Trading Hammers (revisited)

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Quote from rainman2:

...I used the dark hammer line as a bearish continuation candle and entered at its close.As it turned out, I could have gotten a better entry price 2 candle lines later but whose to know...

http://www.elitetrader.com/vb/attachment.php?s=&postid=1075278

So I guess what I'm asking is that if a hammer pattern is not valid , should you use the hammer line as a continuation entry or is their a complete different set of entry rules? If this question goes outside the scope of what your accomplishing in this thread, I apologize...just trying to think outside the box.
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Hi rainman2,

I understand now.

I myself don't use Hammer lines as trade signals when they fail to traverse into a valid Hammer pattern.

If I did...most likely it would involve a completely different set of entry rules.

However, I have experimented with such via intuition trades and not via a specific trading plan...

Results not worth the effort nor stress.

Yet, if I do use a contingency plan to reverse a losing Hammer pattern position if the contingency plan pattern signal appears...

But not a contingency plan for failed Hammer lines that didn't traverse into valid pattern signals.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 
1 min. chart of ER today.. Nice dark hammer formed

11:16est. bar dark hammer formed.. but not a tradeable hammer pattern according to Mark's instructions cause of the large topping tail on the bar 3 intervals prior..

Please let me know if I am missing something
 

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Quote from Flashboy:

2 min. chart at same time frame on ER as previous post does show a valid tradeable hammer pattern..
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Hi Flashboy,

Make sure you've reviewed the specific rules I've posted in this thread about the Bullish White Hammer pattern and the Bullish Dark Hammer pattern because your chart...

http://www.elitetrader.com/vb/attachment.php?s=&postid=1075964

It's not a valid pattern signal via what I've posted in this thread.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 
Quote from NihabaAshi:

Hi Flashboy,

Make sure you've reviewed the specific rules I've posted in this thread about the Bullish White Hammer pattern and the Bullish Dark Hammer pattern because your chart...

http://www.elitetrader.com/vb/attachment.php?s=&postid=1075964

It's not a valid pattern signal via what I've posted in this thread.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
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I must be missing something then.. will try to go over it over the weekend and catch up..

thanks
 
May 23rd Tuesday 2006

CME Russell 2000 Emini - ER2

Bearish Dark Inverted Hammer Pattern
Sub-group: continuation signal
Chart Interval: 3min
PT Levels: not shown so you can figure them out on your own

Many have been blaming the market sell-off on Bernanke's comments earlier this month.

Why do any finger pointing when you can just follow the trend?

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 

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Hi NihabaAshi,

I have a question on PT's. Should the WRB where you take profits be equal to the sum of the 3 previous bodies of the candle lines before your entry signal or should it just be the longest candle line of the previous 3 before entry signal?

For example:

3rd candle before entry candle : body(open/close) = .25
high/low = .40

2nd candle before entry candle : body = .15
hi/low = .20

1st candle before entry candle : body = .20
high/low = .50

Should my Pt be a WRB that reaches .60(body3+body2+body1) or when the WRB reaches .50 ( the largest range of the 3 previous candles before entry candle.)

Also you have mentioned many times about using WRB's as support/resistance. I am very interested in anything you have to say about the 50% level of a WRB?

Thanks in advance.
 
Quote from rainman2:

Hi NihabaAshi,

I have a question on PT's. Should the WRB where you take profits be equal to the sum of the 3 previous bodies of the candle lines before your entry signal or should it just be the longest candle line of the previous 3 before entry signal?

For example:

3rd candle before entry candle : body(open/close) = .25
high/low = .40

2nd candle before entry candle : body = .15
hi/low = .20

1st candle before entry candle : body = .20
high/low = .50

Should my Pt be a WRB that reaches .60(body3+body2+body1) or when the WRB reaches .50 ( the largest range of the 3 previous candles before entry candle.)

Also you have mentioned many times about using WRB's as support/resistance. I am very interested in anything you have to say about the 50% level of a WRB?

Thanks in advance.
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Hi rainman2,

WRB's are measured against the body of the prior three intervals at the minimum.

Thus, based on the numbers of the bodies of the three intervals you gave...

It would be a WRB as soon as it reached .26

Therefore, it's a WRB as soon as it becomes greater than largest (longest) body of the prior three intervals.

WRB Analysis to determine s/r zones involves a WRB or Long Shadow that was involved in either a prior valid candlestick pattern or other things beyond the scope of this thread.

Here's an example of a Long Shadow that was involved in a prior valid candlestick pattern that becomes a key s/r zone via the fact it was a valid pattern signal.

Remember my most recent chart I posted that shows a valid Bearish Dark Inverted Hammer pattern?

http://www.elitetrader.com/vb/attachment.php?s=&postid=1081661

The s/r zone is the entire length (range) of the long upper shadow on that Dark Inverted Hammer Line.

Now draw your zone (the range) from that long upper shadow into today's price action...

What do you see?

Also, I'm not too picky...sometime I'll use the entire range (high to low) as the s/r zone range instead of the long shadow or the body of a key WRB.

Don't misunderstand...I don't recommend taking trades just because price reached a particular s/r zone.

What I'm suggesting is that when prices do reach a s/r zone...its not the time to be ignoring any pattern signals that may appear unless your not interested in making money.

However, there's no guarantee that a pattern signal will appear when price is moving up and down within a key s/r zone.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 
Quote from NihabaAshi:

Hi rainman2,

...Here's an example of a Long Shadow that was involved in a prior valid candlestick pattern that becomes a key s/r zone via the fact it was a valid pattern signal.

Remember my most recent chart I posted that shows a valid Bearish Dark Inverted Hammer pattern?

http://www.elitetrader.com/vb/attachment.php?s=&postid=1081661

The s/r zone is the entire length (range) of the long upper shadow on that Dark Inverted Hammer Line.

Now draw your zone (the range) from that long upper shadow into today's price action...

What do you see?...
More...

I decided to attach a chart to show what I meant and to prevent any misunderstandings.

The green shaded area is the s/r zone (not level like a line drawn in the sand) and its based upon the entire range (high to low) of the Dark Inverted Hammer line.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 

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