Trading Hammers (revisited)
- Thread starter NihabaAshi
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The price patterns on some of your charts on 3/30 didn't meet my rules that I've been discussing in this thread via the Hammer patterns I've disclosed in this thread.
However, in your chart attachment...
http://www.elitetrader.com/vb/attachment.php?s=&postid=1024786
Your chart shows a Bullish Dark Hammer pattern at what looks like @ 14:20pm est although my own chart didn't have the same pattern.
Further, via your chart the price reaction (profit area) to that Bullish Dark Hammer pattern did reach a WRB pt1 at what looks like the last candlestick line on your chart @ 1310.50
Also, via your other chart attachment...
http://www.elitetrader.com/vb/attachment.php?s=&postid=1024843
There was a Bullish White Hammer pattern at 1:00pm est and it failed along with there not being any contingency plan signal to merit reversing that Long into a Short position.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
January 31st Tuesday 2006
CME EuroFX - EC
Bullish Dark Hammer Pattern
Sub-group: reversal signal
Chart Interval: 7min
PT Levels: pt1 via 7min chart and pt2, pt3 via the 15min chart
This is another pattern signal that someone asked me about via either email or private message.
They aspect of that conversation wasn't so much the Bullish Dark Hammer as shown on the biggest chart (7min chart).
It was the Dark WRB that ocurred prior to the Bullish Dark Hammer pattern.
Remember, I've stated many times in this thread its absolutely critical to understand the price action that leads into your pattern signals.
If you don't understand that price action...you should ignore your pattern signal because its like trading with a blind fold on and such makes it very difficult to see where your going.
Now...that particular Dark WRB occurred via the 1030am est EIA Petroleum Status Report.
However, I strongly believe the market had over-reacted shortly prior to that 1030am est report via comments by the Treasury Secretary at a well-followed meeting about the economy.
Also, several pages ago I mentioned that WRBs provide a wealth of information such as changes in supply/demand, s/r zones et cetera.
Take a close look at the body area of that Dark WRB and then go foward and what do you see???
You see the Bullish Dark Hammer pattern occurring within the range of that Dark WRB.
My point with the above is that WRB's gives early hints or clues to tell you to start preparing for a possible trade opportunity if a pattern signal appears.
Just the same...key economic report release times also gives you early hints or clues that a pattern signal may soon appear.
Further, there has been some recent threads about how to predict range bound or trend days...
Read my replies about such in those threads to the thread starter and then correlate that to Wednesday's price action.
http://www.elitetrader.com/vb/showthread.php?threadid=66789
http://www.elitetrader.com/vb/showthread.php?s=&threadid=66829
Now...I also mentioned recently that Long Shadows behaves like WRBs in that they also represent changes in supply/demand and s/r zones.
You can see via the 7min chart the Bullish Dark Hammer pattern...a pattern with a long lower shadow.
Now look at the smaller chart (3min chart) to the right of that 7min chart...
You will see a valid Bullish White Hammer pattern.
This is an example of a multiple pattern signal and such doesn't need to occur on the same chart interval.
P.S. If you see any Hammer pattern signals via the discussion in this thread...
Let me know via posting your charts in this thread or sending your questions to me via either email or pm and I'll provide additional trading tips that involves that particular trading day along with letting you know if that's a valid pattern signal or not.
If the pattern signal is valid...I'll post my own annoted chart because most of the activity involving this thread occurs via either email or pm.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
CME EuroFX - EC
Bullish Dark Hammer Pattern
Sub-group: reversal signal
Chart Interval: 7min
PT Levels: pt1 via 7min chart and pt2, pt3 via the 15min chart
This is another pattern signal that someone asked me about via either email or private message.
They aspect of that conversation wasn't so much the Bullish Dark Hammer as shown on the biggest chart (7min chart).
It was the Dark WRB that ocurred prior to the Bullish Dark Hammer pattern.
Remember, I've stated many times in this thread its absolutely critical to understand the price action that leads into your pattern signals.
If you don't understand that price action...you should ignore your pattern signal because its like trading with a blind fold on and such makes it very difficult to see where your going.
Now...that particular Dark WRB occurred via the 1030am est EIA Petroleum Status Report.
However, I strongly believe the market had over-reacted shortly prior to that 1030am est report via comments by the Treasury Secretary at a well-followed meeting about the economy.
Also, several pages ago I mentioned that WRBs provide a wealth of information such as changes in supply/demand, s/r zones et cetera.
Take a close look at the body area of that Dark WRB and then go foward and what do you see???
You see the Bullish Dark Hammer pattern occurring within the range of that Dark WRB.
My point with the above is that WRB's gives early hints or clues to tell you to start preparing for a possible trade opportunity if a pattern signal appears.
Just the same...key economic report release times also gives you early hints or clues that a pattern signal may soon appear.
Further, there has been some recent threads about how to predict range bound or trend days...
Read my replies about such in those threads to the thread starter and then correlate that to Wednesday's price action.
http://www.elitetrader.com/vb/showthread.php?threadid=66789
http://www.elitetrader.com/vb/showthread.php?s=&threadid=66829
Now...I also mentioned recently that Long Shadows behaves like WRBs in that they also represent changes in supply/demand and s/r zones.
You can see via the 7min chart the Bullish Dark Hammer pattern...a pattern with a long lower shadow.
Now look at the smaller chart (3min chart) to the right of that 7min chart...
You will see a valid Bullish White Hammer pattern.
This is an example of a multiple pattern signal and such doesn't need to occur on the same chart interval.
P.S. If you see any Hammer pattern signals via the discussion in this thread...
Let me know via posting your charts in this thread or sending your questions to me via either email or pm and I'll provide additional trading tips that involves that particular trading day along with letting you know if that's a valid pattern signal or not.
If the pattern signal is valid...I'll post my own annoted chart because most of the activity involving this thread occurs via either email or pm.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
Hi Romik,
Yes...it looks good.
Mark
April 7th Friday 2006
CME Russell 2000 Emini - ER2
Bearish Dark Inverted Hammer Pattern
Sub-group: reversal signal
Chart Interval: 3min
PT Levels: not shown so you can figure them out on your own
The 0830am est Employement Situation economic report price action was the precursor to today's Bearish Dark Inverted Hammer pattern that formed @ 0942am est (775.60).
What's interesting about this chart is that the White WRB and the dark line that occurred prior to the Dark Inverted Hammer line had occurred within the s/r zone of that White Inverted Hammer from that 0830am est price action.
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1033023</img>
Prior Discussion Correction
In my previous chart discussion...in error I used the wrong date as shown below and that date should have stated April 5th Wednesday 2006...
_____________________
04-06-06 08:13 AM
January 31st Tuesday 2006
CME EuroFX - EC
Bullish Dark Hammer Pattern
Sub-group: reversal signal
Chart Interval: 7min
PT Levels: pt1 via 7min chart and pt2, pt3 via the 15min chart
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
CME Russell 2000 Emini - ER2
Bearish Dark Inverted Hammer Pattern
Sub-group: reversal signal
Chart Interval: 3min
PT Levels: not shown so you can figure them out on your own
The 0830am est Employement Situation economic report price action was the precursor to today's Bearish Dark Inverted Hammer pattern that formed @ 0942am est (775.60).
What's interesting about this chart is that the White WRB and the dark line that occurred prior to the Dark Inverted Hammer line had occurred within the s/r zone of that White Inverted Hammer from that 0830am est price action.
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1033023</img>
Prior Discussion Correction
In my previous chart discussion...in error I used the wrong date as shown below and that date should have stated April 5th Wednesday 2006...
_____________________
04-06-06 08:13 AM
January 31st Tuesday 2006
CME EuroFX - EC
Bullish Dark Hammer Pattern
Sub-group: reversal signal
Chart Interval: 7min
PT Levels: pt1 via 7min chart and pt2, pt3 via the 15min chart
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
Hi romik,
Although that is a valid Bearish Dark Inverted Hammer pattern...
It is not the particular sub-group I myself is discussing about the Bearish Dark Inverted Hammer pattern.
Some of the rules via my particular Bearish Dark Inverted Hammer sub-group were discussed back on 09-19-05 09:01 AM.
However, before I post one more of its rules...
Lets talk about the most important thing that produced that Bearish Dark Inverted Hammer pattern that you saw.
Why has the market been selling off for the past few trading days???
I think it has a strong connection to Oil via what's going on in Iran and its nuclear statement, Nigeria, switch in gasoline formulation from MTBE to ethanol and the expectations of retail gasoline prices will rise (consumers willing to pay higher prices).
Throw in a few other reasons and you'll see the difference between the overbought conditions in the Eminis a few days ago versus the prior overbought conditions that didn't sell off.
Once again...the key connection here is Oil and to not be monitoring its impact is like trading the Eminis blind especially since such has been the talk of the town for several trading days now.
* NYMEX Light Crude Oil CL
* e-miNY Oil QM
* Exchange Traded Fund OIH
* Index OIX.X
Any other well followed Oil index or trading instrument will help with your position size management of the Eminis (ER2, ES, NQ and YM) along with helping you ride those winners a little longer to higher profit target levels because you understand the price action and can feel the downside pressure.
With that said...there was a Bearish Inverted Dark Hammer pattern via the particular sub-group I'm discussing in this thread on ER2 5min chart today via the Dark Inverted Hammer Line closing @ 9:45am est and its White WRB occurred yesterday @ 4:05pm est (regular session chart).
I monitor both regular and all session charts.
As I said before...there are different types (sub-groups) of Bearish Dark Inverted Hammer patterns and your chart represents one of those valid sub-group patterns I have documented extensively.
However, the sub-group I'm talking about that I like to trade has some of the rules discussed back on 09-19-05 09:01 AM and below is one more rule I'll now discuss to explain why I don't like to trade your particular sub-group.
________
There must be at least one dark candlestick line among either of the following:
* Among the three intervals prior to the White WRB.
* Among the intervals between the White WRB and the Dark Inverted Hammer line.
_________
Your sub-group doesn't have a dark line among the three intervals prior to the White WRB nor among the intervals between the White WRB and the Dark Inverted Hammer Line.
That dark line requirement is important to give me clues that the buying or demand is not as strong as it may seem and the long upper shadow of the Dark Inverted Hammer line helps to give additional clues about a possible exhaustion...
Then the engulfing aspect of that long upper shadow helps piece the puzzle together with the Oil situation being the most important (biggest) piece of that puzzle.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
Hi NihabaAshi,
Hope all is well with you. I have a candlestick question and thought you would be the best person to ask.
In your experience, when dealing with short-term intraday charts, (1min-5min) if I was to focus exclusively in the most dependable of all candlestick formations for these time frames, which one should I use in your opinion?
I can only use one.
Thanks a million !!!
Hope all is well with you. I have a candlestick question and thought you would be the best person to ask.
In your experience, when dealing with short-term intraday charts, (1min-5min) if I was to focus exclusively in the most dependable of all candlestick formations for these time frames, which one should I use in your opinion?
I can only use one.
Thanks a million !!!
Hi Optionpro007,
See pm I sent you.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
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