Trading Hammers (revisited)

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Quote from romik:

I am not sure I understand, I've mentioned PTs above :confused:
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I was hoping you would repost your chart with them annotated with the profit target levels to prevent misunderstanding for someone new to the thread that may try to connect the dots on their own sort'uv speak especially since you didn't mentioned the times for that profit target 1 (pt1) when it was reached.

Anyways...on your chart it looks like pt1 was reached in the interval that closed at 1115am est.

That interval first became a WRB pt level when it hit the price 1313.00 and the interval went as high as 1314.75

Thus, your profit target 1 (pt1) is dependent upon your experience with WRBs for a price anywhere between 1313.00 - 1314.75

Now...if you look at the price action since 3pm est on April 17th Monday...

Your Bullish White Hammer pattern is not a trend reversal signal.

Instead, its a trend continuation signal.

Knowing that you would have increased increased your intervals for pt2 and higher.

Therefore, since I don't know what type of chart intervals you like to use above the 15min chart interval...

I like to use in situations like this the 30min or 60min chart interval.

However, since this is all hindsight analysis, I was a little surprised by the initial price decline in the Eminis that lead into 1030am est.

That surprise would have encourage me to use the 30min chart in thinking that the 60min chart is too long of a duration.

Via the 30min chart in the interval that closed at 1230pm est...

A profit target 2 (pt2) was first reached at the price 1315.75 and the interval went as high as 1316.50

Once again...your profit target 2 (pt2) is dependent upon your experience with WRBs for a price anywhere between 1315.75 - 1316.50

Further, based upon how I trade (trade management after entry)...if I had any remainders after taking profits at a pt2...

Those remainders would have had their trailing stop picked off for a small profit and I would have been looking for re-entry signals since it is a trend continuation price action.

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

NihabaAshi

i was wondering how long the shadow has to be when you are trading this pattern and I think you have to have 2-5 bars down before you get in????.....................what indicators do you use with this chart??

Thanks
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Hi rateesquad,

You've asked the indicator question again and my last response to it was that I asked you to read my prior message (I gave the date and time of that message) for your answer.

Simply, I don't use indicators.

I'm a price action only trader and all the stuff I mentioned in this thread so far that are much more important than the Hammer pattern itself are what I exploit (ex. key economic reports, regular schedule market events et cetera).

Also, please re-read the entire thread (to ask these questions without reading the thread will be confusing to you).

In this thread I explained the dynamics of the White Hammer Line itself and that it does not mean its a valid Pattern.

I also explain that for example that the long lower shadow > body + upper shadow.

I also state that the Body > Upper Shadow.

Simply, there's no fix number for the Long Lower Shadow as long as it meets the above rules.

Thus, today if may be 7 ticks in length and tomorrow it may be 3 ticks in length and the following trading day it may be 10 ticks in length.

Further, I go on to state in-depth the characteristics of the price action (no subjectivity) specifics about how the White Hammer Line must interact with the prior three intervals to traverse from a Line into a Pattern.

I did this for the three patterns I'm discussing in this thread.

* Bullish White Hammer Pattern

* Bullish Dark Hammer Pattern

* Bearish Dark Inverted Hammer Pattern

Once again, the most important aspect of this discussion is understanding the price action that leads into these patterns...

It's repetitive and can be exploited as long as the markets keep telling us when these key events will occur.

http://online.wsj.com/public/resources/documents/b-econoday.htm

Then once you began to understand the catalyst or precursors for the price action...

After a few years of experience with understanding price itself...you'll began to see or should see market seasonal patterns or intraday tendency patterns and such can help you with your position size management.

Don't get tunnel vision with Japanese Candlestick Analysis. It's a useless trading tool if you don't know what the market is saying or why the pattern is forming.

Notice how in the above quote I used the word forming instead of formed.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 
Sorry Mark, I don't have a software to write on charts. Otherwise I would have done it.

Would it matter whether it is trend continuation or trend reversal to make this a tradable opportunity? I suppose it is more in relation to establishing profit targets, is it not?




Quote from NihabaAshi:

I was hoping you would repost your chart with them annotated with the profit target levels to prevent misunderstanding for someone new to the thread that may try to connect the dots on their own sort'uv speak especially since you didn't mentioned the times for that profit target 1 (pt1) when it was reached.

Anyways...on your chart it looks like pt1 was reached in the interval that closed at 1115am est.

That interval first became a WRB pt level when it hit the price 1313.00 and the interval went as high as 1314.75

Thus, your profit target 1 (pt1) is dependent upon your experience with WRBs for a price anywhere between 1313.00 - 1314.75

Now...if you look at the price action since 3pm est on April 17th Monday...

Your Bullish White Hammer pattern is not a trend reversal signal.

Instead, its a trend continuation signal.

Knowing that you would have increased increased your intervals for pt2 and higher.

Therefore, since I don't know what type of chart intervals you like to use above the 15min chart interval...

I like to use in situations like this the 30min or 60min chart interval.

However, since this is all hindsight analysis, I was a little surprised by the initial price decline in the Eminis that lead into 1030am est.

That surprise would have encourage me to use the 30min chart in thinking that the 60min chart is too long of a duration.

Via the 30min chart in the interval that closed at 1230pm est...

A profit target 2 (pt2) was first reached at the price 1315.75 and the interval went as high as 1316.50

Once again...your profit target 2 (pt2) is dependent upon your experience with WRBs for a price anywhere between 1315.75 - 1316.50

Further, based upon how I trade (trade management after entry)...if I had any remainders after taking profits at a pt2...

Those remainders would have had their trailing stop picked off for a small profit and I would have been looking for re-entry signals since it is a trend continuation price action.

Mark
(a.k.a. NihabaAshi Japanese Candlestick term
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Dear Romik,

If you have Windows, you already have the software, it's called Paint. Just open the saved charts in Paint and you can draw lines and add text. It's fairly primitive, but it does the trick in a pinch.

It's usually located in the Accessories section of the Start menu.
 
Quote from bundlemaker:

Dear Romik,

If you have Windows, you already have the software, it's called Paint. Just open the saved charts in Paint and you can draw lines and add text. It's fairly primitive, but it does the trick in a pinch.

It's usually located in the Accessories section of the Start menu.
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Duh, never realised i could do that, thanks :D
 
Quote from romik:

Duh, never realised i could do that, thanks :D
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Only problem with Paint is that it saves the image as a .bmp file and such files may not be uploadable as attachments if they are too large in byte size.

Instead, I recommend you use any free image capture program that allows you to save your images as either .png or .gif files.

(lots of them on the market)

You save space to on your hard drive when you store them as either .png or .gif files in comparison to .bmp files.

Quote from romik:

...Would it matter whether it is trend continuation or trend reversal to make this a tradable opportunity? I suppose it is more in relation to establishing profit targets, is it not?
More...

No...it doesnt matter in reference to whether its a tradable opportunity.

However, being able to identify the type of price action (continuation, reversal, counter-trend or whatever) has impact on your trade management and/or position size management of the price action.

For example, I tend to hold trades longer and use more size when the Hammer patterns occurs as continuation signals.

Another example, I never ADD to a profitable counter-trend trade if I get an ADD signal.

However, I will ADD to a profitable trend reversal or trend continuation trade if I get a ADD signal.

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