Quote from gotta_trade:
...Is this a White Hammer Pattern?
What would you say to this trade?
On 3 minute chart.
11:54 Buy 2 ES 1270.25
12:04 Sell 1 ES at 1271.50
12:04 move protective stop up to break even.
12:29 Sell 1 ES 1273
I attached a 3 minute and a 5 minute chart.
If it's not valid. Why not?
If it is valid, would you have entered?
If you would have entered where would your profit targets and initial protective stop be placed? (using up to 3 profit targets)
Do you have any other thoughts about this?
It's a little early for me to ask you questions, since I just started studying candlesticks, but I still wanted to ask.
Thank You,
gottta_trade
Hi gotta_trade,
There are over a dozen different types of valid Bullish White Hammer patterns or what I often call
sub-groups.
In this thread I'm only talking about one particular type and that particular sub-group is not represented in your charts.
Simply, they are valid Bullish White Hammer patterns but not one of the most reliable ones as the one I'm discussing in this thread.
Here's what I didn't like about the
3min chart...
Whenever I see three consecutive dark candlesticks with lower closes as the most recent three intervals to the White Hammer Line...
That's a lot of downside pressure that often requires and unusual volume spike or volatility spike to support a price direction change back upwards via a White Hammer Line.
Therefore, I want to see the Close of the White Hammer Line > Open of the most recent dark candlestick line to give me more hints that supply/demand is changing and is somewhat stable after changing.
In your chart the Close of the White Hammer Line = Open of the most recent dark candlestick line.
That doesn't convince me that there's a change in supply/demand.
Next...here's what I didn't like about your
5min chart...
I prefer my the bodies of my White Hammer Lines > Upper Shadow...not equal nor less than the upper shadow.
In your chart the body is equal to the upper shadow.
With that said...lets pretend it was a valid Bullish White Hammer pattern for me on the 3min chart.
The first White WRB pt1 @ 1206pm est for a price of 1271.50
I most likely would have switch to the 5min chart for the higher level WRB profit targets.
Pt2 @ 1230pm est 1273.25
Pt3 @ 1255pm est 1276.00
Then I would try to hold any remainders into a few minutes prior to the close (before 4:15pm est).
As for the initial stop/loss protection.
It's important to remember where the most logical spot to place that stop.
That's either at the low of the Hammer or about 1 tick below that low.
Now...for me...I don't like that stop/loss protection area because I feel like I'm broadcasting where my stops are at for easy pickings.
I put my initial stop much lower and then compensate for the increased risk exposure via such a wide stop by either reducing my position size or getting a better entry price (lower entry within the range of the long lower shadow) in comparison to the pattern signal price.
If I can't do either of the above its too risky for me and I ignore the trade setup.
This is an aspect of controlling your risk exposure via position size management or exploiting candlestick s/r zones.
Mark
(a.k.a.
NihabaAshi) Japanese Candlestick term
