Quote from romik:
Hi,
Could you have a look @ 11am bar, is that a Bullish Dark Hammer Pattern? Thanks.
Hi romik,
Thanks for the chart and comments.
Your chart is a valid Bullish Dark Hammer Pattern but not via the particular sub-group I'm discussing in this thread.
Via the discussion I'm discussing...the below rule disqualified your chart:
* Close of White Line (c1) must be < or = Highest High among the prior three intervals.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=5&pagenumber=53
(specific rules discussed at the above link)
Now...I'll briefly mention why it is a valid Bullish Dark Hammer pattern via a
different sub-group.
Remember in my recent posts in this thread I discussed how WRBs and Long Shadows are key candlestick s/r zones.
Look at your chart again and you'll see a Dark WRB that completed itself @ 1035am est.
The close of the White WRB Line (c1) has closed within the body range (zone) of that key Dark WRB.
That's another type of Bullish Dark Hammer pattern that involves a prior Dark WRB as a criteria for the trade signal.
However, in that example...its a low reliable pattern if the close of the White WRB Line (c1) < mid-point of the Dark WRB Body.
Reliability improves if the White WRB Line (c1) > mid-point of the Dark WRB Body.
As I mention...this is not a particular sub-group I want to discuss because its far too much info, gets too far into some advance price action only info that has nothing to do with Japanese Candlestick analysis and there's many other rules involved.
With that said...back to the Bullish Dark Hammer pattern sub-group I want to talk about...here's another rule not discussed:
* Interval (c3) must be a Dark Line
In your chart its a White Line and is another reason why your chart doesn't qualify for the particular Bullish Dark Hammer pattern I'm discussing in this thread.
Lets pretend that was a valid sub-group via what I'm discussing in this thread...
That trade would have resulted in either a breakeven trade or +1 tick profit.
Here's why and not shown on your chart...
As I mention early in this thread in my discussions with sunnyskies...trade management is key regardless if you use Japanese Candlesticks or not.
With that said...I personally use what I call a
trigger price (if reached as a profitable position so far) to tell me when its time to move my initial/stop protection into either a breakeven trade or +1 tick profit trade.
I also mention in that discussion with sunnyskies that when I trade ES my trigger price is +1 point profit.
Simply, when ES moves in my favor by +1 point profit...that's when I make the adjustment in my stop/loss management.
Obviously if I'm trading a different trading instrument, I'll be using a different designated trigger price to adjust my initial stop/loss protection into a worst case scenario as a breakeven trade.
Just remember a key trading rule...don't make it a habit of letting profitable trades become losing trades via either taking profits when profit targets are reached or adjusting your stops when particular price levels are reached in your favor.
Also, someone once asked me via email after I first mentioned that in this thread about what to do if either the breakeven stop or +1 tick stop is hit and the price then reverses to move strongly in your favor without you on board the profit train.
My reply was that its important to have a
complete trading plan for any method regardless if your trading a candlestick pattern or not.
* Pattern Signal
* Entry Signal
* Stop Management Method
* Profit Target Method
* Re-Entry Method
* Contingency Plan Method
The above should be the basic of a complete trading plan.
Thus, you may not get a re-entry signal after all stop outs (profit or loss) but the few times you do get a re-entry signal is worth the effort for having such in your trading plan.
Something else...whenever you see a long lower shadow Dark Hammer
Line or any type of long shadows that's part of the
Long Shadow Family (lines are not tradable by itself)...
http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=5&pagenumber=42
Take a quick peak at the lower chart intervals of that Dark Hammer Line to see if there are any Bullish White Hammer patterns, Bullish Dark Hammer patterns or bullish patterns of anything else you may be using.
(Via your 5min chart I would have taken a quick peak at the 3min and 2min charts)
My point is this...all pattern signals have
clues or hints that occurs just minutes before you get an actual trade signal and changing your perspective during those hints may reveal another pattern signal that allows a better entry price...
Learning and understanding what to look for as early clues will make you that much better prepared to trade and prevent missed trade opportunities, increase your profit potential or give you more breathing room to survive those infamous wiggle retracements prior to the profit train leaving the station.
(last thing you want to be doing is trying to rush and get your order entry up especially in a fast moving market)
Last of all, don't forget to keep SPX.X Index, AMEX SPY or any other related S&P 500 chart side by side or in view with your ES Emini chart because there may be a valid Hammer pattern trade on one of those other charts that merits a trade in ES eventhough ES itself has no valid Hammer pattern trade.
Mark
(a.k.a.
NihabaAshi) Japanese Candlestick term
