Trading Hammers (revisited)

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Quote from belmondo:

Hi NA,

on page 32 you have YM chart. all rules are there but you said that the shadow should be bigger than 3 prior candle bodies. but on this example shadow is not bigger than the prior body.
thank you in advance
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Can you post a direct link because everybody at ET have a different setting for what's page 32.

For example, my setting is 5 messages per page and that produces the following page 32...

http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=5&pagenumber=32

As you can see via the above page 32...there's no chart attachments for a YM chart.

Mark
 
Quote from belmondo:

Hi NA,

on page 32 you have YM chart. all rules are there but you said that the shadow should be bigger than 3 prior candle bodies. but on this example shadow is not bigger than the prior body.
thank you in advance
More...

Hi Belmondo,

Thanks for the link to the chart.

http://www.elitetrader.com/vb/attachment.php?s=&postid=831167

That's one of the two charts (I can't remember the other one) where I called them valid and stated I would come back to them and discuss particular things about the charts...

I didn't and will talk about this particular chart.

At the time of the posting, I had been thinking about a problematic price action where the White Hammer Line occurs after three consecutive down intervals (dark lines).

It's ok as a trend continuation signal as in that chart but poor results as a trend reversal signal.

Not wanting to get into what some consider to be a trend or not a trend...

I decided to implement the rule (after the posting of that chart) that a White Hammer Line that doesn't close above the Open of the most recent dark line...a dark line that's part of the three consecutive down intervals...

It's not valid.

Also, via a discussion elsewhere, let me clarify something about my use of the word valid.

There are many different types of Bullish White Hammer patterns that I call sub-groups.

In this thread I'm only talking about one sub-group Bullish White Hammer pattern.

Therefore, when I say its not valid...I'm saying its not valid for discussion in this thread concerning that one particular sub-group.

Simply, I'm not implying its not a Bullish White Hammer pattern.

I'm implying its not the particular type of Bullish White Hammer pattern I'm discussing in this thread.

Another way to look at it...there are many valid Bullish White Hammer patterns that are not reliable for consistent profits.

There are a few valid Bullish White Hammer patterns that are reliable for consistent profits and I'm discussing only one particular type in this thread.

Getting back to that chart...

When a Dark WRB is among the three prior intervals before the White Hammer Line...

You don't compare the White Hammer Line to the Dark WRB other than that the White Hammer Line Low < Dark WRB Low.

Thus, you compare the White Hammer Line to the three intervals before the Dark WRB as stated many times in this thread.

In that particualr case, the White Hammer Line in that chart when compared to the three intervals before the Dark WRB...

It does satisfy the requirements.

Yet, as mentioned above, its invalid now (not at the time I posted the chart) because the White Hammer Line failed to closed above the Open of the most recent Dark Line that just happens to be a Dark WRB in this chart.

As for the other chart I need to post additional commentary about...

I can't remember its attachment location.

:mad:

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 
Hi belmondo,

I found that other chart that represents those three consecutive declining dark lines before the White Hammer Line.

http://www.elitetrader.com/vb/attachment.php?s=&postid=813294

At the time of the post...it was valid (just like the chart you questioned) but not really part of the particular White Hammer pattern sub-group I'm discussing.

Further, just like the chart you've questioned...had the White Hammer Line closed above the Open of the most recent prior dark line...

http://www.elitetrader.com/vb/attachment.php?s=&postid=831167

It would have been valid for discussion.

Anyways, at the time of the chart posting, both of the above charts were valid and had not been identified as a separate sub-group.

Simply, its now a sub-group of its own and is invalid for discussion in this thread as a reliable Bullish White Hammer pattern.

That's one of the good things about this thread.

I was able to isolate an additional sub-group that wasn't reliable and segrate it as its own unique price action.

By the way, after those charts were posted, later in this thread we begin discussing that price action as being unreliable and not valid...

Three consecutive down intervals as Dark Lines (regardless if there's a Dark WRB or not among the three intervals) before the White Hammer Line when the Close of the White Hammer Line < Open of the the prior most recent Dark Line.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 
Thank you very much Niha,

i'm just reading page 35, so 100 to go :-) I missed your note about "comparing the White Hammer Line to the three intervals before the Dark WRB", sorry.

well hope this thread will not be closed soon since more question will come from my side
 
Professor ;

I have attached a shot of what is NOT an Inverted Dark Hammer Pattern via the sub-group being discussed in this thread. More exactly, I think this is not a valid pattern via your rules.

What follows are my observations of the PRICE ACTION:

1. There is a dark candle line between the dark inverted hammer and a white WRB.

2. The dark hammer engulfs the prior dark candle line.

3. The body of the interval between the hammer line and the WRB is smaller than the depth of the long shadow of the hammer line.

4. the first two intervals prior to the WRB are smaller than the depth of the long shadow of the hammer line.

5. NOT all the above mentioned wicks are less than the depth of the wick (long shadow) of the hammer line.

6. the furtherest interval of the three intervals prior to the WRB has both a long shadow and a body (white) that are equal to or greater than the long shadow of the hammer line.

7. The body of the hammer line is equal to the depth of its long shadow.

elements in 5,6, and 7 make this an invalid hammer line via the rules you are discussing, do they Not? That is, if 5,6,7, were not true would this be a valid pattern via the pattern sub-group you are discussing?
 

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Quote from KPCURRENCY:

Professor ;

I have attached a shot of what is NOT an Inverted Dark Hammer Pattern via the sub-group being discussed in this thread. More exactly, I think this is not a valid pattern via your rules.

What follows are my observations of the PRICE ACTION:

1. There is a dark candle line between the dark inverted hammer and a white WRB.

2. The dark hammer engulfs the prior dark candle line.

3. The body of the interval between the hammer line and the WRB is smaller than the depth of the long shadow of the hammer line.

4. the first two intervals prior to the WRB are smaller than the depth of the long shadow of the hammer line.

5. NOT all the above mentioned wicks are less than the depth of the wick (long shadow) of the hammer line.

6. the furtherest interval of the three intervals prior to the WRB has both a long shadow and a body (white) that are equal to or greater than the long shadow of the hammer line.

7. The body of the hammer line is equal to the depth of its long shadow.

elements in 5,6, and 7 make this an invalid hammer line via the rules you are discussing, do they Not? That is, if 5,6,7, were not true would this be a valid pattern via the pattern sub-group you are discussing?
More...

Hi KPCURRENCY,

Thanks for the chart and your perspective.

As noted earlier, just because a price action involving Hammers is not valid for what I'm discussing...

It doesn't imply its not valid for someone else nor does it imply its not reliable.

With that said, here's my price action observation about your commentary and about your chart even though my comments starts to get more into things beyond the scope of this thread that's independent of Hammer patterns.

There's actually two key WRBs involved in the price action, three Inverted Hammer Lines and two Hangman.

The first key WRB (see attachment of your chart that I edited) provides valuable information about the volatility because it is a volatility spike out of a range of contracting volatility.

That's an explosive move and you really need to know what your doing to either go Long or Short within such a price action.

More important, you need to look beyond (what occurred prior) to that parabolic price movment to the upside...

Connecting the dots sort'uv speak to help with understanding the price action as it shifted in supply/demand.

I won't go into further details to explain my annotations on the chart because its way beyond the scope of this thread and really has nothing to do with Hammers.

The point of my commentary is to understand what caused the price action.

Just the same, to understand even if no pattern signal was produced, even if you missed a trade signal if a pattern signal was produced et cetera...

You will have a better understanding of the price action as you develop your own story line to help exploit what occurs later on the right side of the chart.

Last of all, YES, if you change the price action involved in your highlighted area with the purple line...

It could be a Hammer pattern that I'm discussing in this thread.

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

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Thank You for your comments. There is much to take in and you wisdom continues to both inspire and humble me.

I did see some reason why price "should" go down. Said reasons are beyond the scope of this thread and thus cannot be discussed.

What determines if a particular WRB carries more weight than any subsequent or proceeding WRB? Even as I ask this, I know that the answer will be the PRICE ACTION both before and after the WRB CANDLE LINE.

Of course inherent in the words price action is the concept of volatility.

I have attached another screen shot of what appears to be a valid inverted dark hammer via the rules you are discussing.

To be blunt, while there are many sub-groups of hammers and you are only discussing a few of the valid ones, If it is not one you are discussing I am not interested in it.
 

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Quote from KPCURRENCY:

...I have attached another screen shot of what appears to be a valid inverted dark hammer via the rules you are discussing...

http://www.elitetrader.com/vb/attachment.php?s=&postid=1408999
More...

Hi KPCURRENCY,

One of the key rules about this particular sub-group Bearish Dark Inverted Hammer pattern is that its long upper shadow is engulfing the body of at least one of the most recent prior intervals as shown in all the chart examples posted in this thread (some charts are reposted below).

http://www.elitetrader.com/vb/attachment.php?s=&postid=812656

http://www.elitetrader.com/vb/attachment.php?s=&postid=815482

http://www.elitetrader.com/vb/attachment.php?s=&postid=817708

http://www.elitetrader.com/vb/attachment.php?s=&postid=818015

http://www.elitetrader.com/vb/attachment.php?s=&postid=805475

http://www.elitetrader.com/vb/attachment.php?s=&postid=806171

http://www.elitetrader.com/vb/attachment.php?s=&postid=837313

http://www.elitetrader.com/vb/attachment.php?s=&postid=847481

On Sept 4th 2005 the engulfing aspect involving the Bearish Dark Inverted Hammer pattern at the below link is discussed.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=5&pagenumber=40

Later on Sept 19th 2005 I provided more info and rules about the Bearish Dark Inverted Hammer pattern with an excellent chart example involving sister trades in which the pattern signal occurs in a different trading instrument of highly correlated price action...
http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=5&pagenumber=60

Therefore, you should be able to clearly see why your chart does not represent the particular type of Bearish Dark Inverted Hammer pattern I'm discussing in this thread.

However, your chart does represent another reliable sub-group Bearish Dark Inverted Hammer pattern...a particular sub-group I'm not discussing in this thread.

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

* I see that the white candle line tests the white WRB. This white line should not have a low that is equal to or less than the low of the WRB.

* I see that my Dark Inverted Hammer (DIH) has a portion of its body within the body of the proceeding dark candle line. In your charts the body of the DIH is not > than the low of the close of the prior dark candle line.

*I see that the Long Upper Shadow of the DIH is greater than the high of the WRB and the dark candle line AND it is HIGHER THAN ALL THE CANDLES in the pattern (it traverses from line to pattern).

* I see that there is much that I am in the dark about. But I am warmed by the glow of your generosity and knowledge that lights the path I walk.
 
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