Trading Hammers (revisited)

[romik]

Quote from romik:

Bullish White Hammer Pattern in the S&P500 index daily chart, PT1 @ ~1290, PT2 ~1307, PT3 ~1320. Stop @ 1230-1235 range.

Move might be supported by a bullish divergence in the histogram.

It is quite unrealistic to expect this trade to work now as S&P is sitting just above (IMO) a major support level, stop has not been triggered, though I would not be surprised if by tomorrow I will be placing a reverse trade using double position size. I am not too upset about this trade, as it could have been a profitable one retesting 1290 level at least.

I also do not see anything in the TAs to suggest a pullback from these levels, at least not yet. The market is looking pretty weak with recent unsustainable pullbacks resulting in pretty heavy selling. Perhaps S&P is 1180 range bound, who knows.

 

[Flashboy]

Quote from NihabaAshi:

My question to you is this...you have previously mention this type of triangle price action after a lower high when the overall trend wasn't so hot in that you discussed Shorting such type of price action.

What's different now to make you consider playing this from the Long side???

I still agree with that approach.. Hammers are much less reliable after breaking out of a continuation pattern.. I was just asking to see if there was anything I was missing in what you usually see in the price action.

By the way.. I took that long in the ER (Paper trade) based on the price action of the ER and the fact that the ES looked like it might be ready to reverse.. I did not see the whole picture though.. For some reason I blocked out the continuation pattern the price had broken out of and was only concentrating on those few bars that were forming cause I was afraid of missing out on a good trade..

By the way, do you see the Dark WRB that formed a few intervals after the Dark Hammer Line in your triangle???

A Dark WRB that closed within the lower shadow of the Dark Hammer Line...

May be worth your time to see how reliable of a signal that is to reverse a Long position into a Short position as a contingency plan.

Are you referring to the bar on the 15:00 est line??
I will look into it.. I've briefly touched on these things in the past but never followed through on them..

thanks again for the help..

 

[tradersaavy]

Quote from rainman2:

Hi Tradersaavy,

How long do you hold your trades?(minutes,hours,days,weeks)

Why enter on a break of 10950?

Do you enter when price breaks 10950 or when a hourly candle closes above 10950?

Where would you put your stop?

Thanks in advance

How long I hold these trades depends on the market action. These type of trades are more of what is known as 'swing trades' being that I could hold them a day or a week or more.
For these type of trades I trail a stop and stay in the trade until I am stopped out or if I feel that a major support or resistance line is hit I may take profit at that area. I suppose one could say there is 'discretion' in the plan.

Entering over 10950 is what I saw as a swing point, or resistance point that if broken could mean that a new resistance point may be sought.

The initial stop is usually 20 to 25 points from entry. Volatility has picked up recently so some of the stops of late have been near 30 points. Stops are trailed after the move has gone about 25 points in favor of the trade.

Niha, sorry if this is cluttering a good Hammer thread. I always like to reply to questions though as you never know who may benefit from something.

 

[rainman2]

Hi NihabaAshi,

I"m posting a trade that I didn't make today(got crushed in an intuition trade in IWM where I sold short a break of the pre- market low. I'm pretty sure I got the low print before it ripped. My contingency plan was to imitate what a deer staring into headlights looks like.) DISCIPLINE,DISCIPLINE!!!!

The funny thing about it was that the trader that sits next to me who trades oil was commenting about how many large size offers were "on the book" pre-market in oil stocks, so look for opportunities to short.
PATIENCE,PATIENCE!!!!

Anyways, I'm pretty sure its a valid dark inverted hammer pattern. My question is on exits. Any and all comments are always appreciated.

 

[NihabaAshi]

Quote from tradersaavy:

...Niha, sorry if this is cluttering a good Hammer thread. I always like to reply to questions though as you never know who may benefit from something.

Hi tradersaavy,

No clutter at all especially since your discussing how you use hammer patterns.

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

 

[NihabaAshi]

Quote from rainman2:

...Anyways, I'm pretty sure its a valid dark inverted hammer pattern. My question is on exits. Any and all comments are always appreciated.

Hi rainman2,

Yes...that's a valid Bearish Dark Inverted Hammer pattern and it looks like it reached a WRB pt2 level before it begin to counter-thrust back upwards after making that new intraday low around 11:10 - 11:15am.

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

 

[NihabaAshi]

Quote from Flashboy:

...Are you referring to the bar on the 15:00 est line??
I will look into it.. I've briefly touched on these things in the past but never followed through on them..

thanks again for the help..

Hi Flashboy,

I was referring to the Dark WRB that opened @ 2:35pm est and closed @ 2.40pm est via the 5min chart.

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

 

[rainman2]

Hi NihabaAshi,

I have a question on price action confirmation.

1- Bearish action with a candle line that preceeds a dark bullish hammer that has an opening price of 25.00

2- Candle line after dark bullish hammer has a high of 25.05 but closes at 24.98.

Questions: Does that confirm a shift from supply to demand? If so, does an entry anywhere below 25.00 constitute price improvement? How important in your opinion does the closing price of the candle affect the price action shift(in this case from supply to demand) or does the fact that price exceeded 25.00 confirm shift?

Sorry I don't have a chart for the visual. As always, thanks in advance.

 

[NihabaAshi]

Quote from rainman2:

Hi NihabaAshi,

I have a question on price action confirmation.

1- Bearish action with a candle line that preceeds a dark bullish hammer that has an opening price of 25.00

2- Candle line after dark bullish hammer has a high of 25.05 but closes at 24.98.

Questions: Does that confirm a shift from supply to demand? If so, does an entry anywhere below 25.00 constitute price improvement? How important in your opinion does the closing price of the candle affect the price action shift(in this case from supply to demand) or does the fact that price exceeded 25.00 confirm shift?

Sorry I don't have a chart for the visual. As always, thanks in advance.

Hi rainman2,

It's impossible for me to answer your questions because you have not given me the entire picture.

I would need to know the Open and Close of each of the three intervals before the Dark Hammer Line.

I would need to know the Open and Close of the Dark Hammer Line itself.

I would need to know the Open and Close of the interval after the Dark Hammer Line.

Even better...use an edit program (windows paintbrush will do) and draw the hypothetical candlestick pattern and post it.

Only thing I can say is that all Bullish Dark Hammer patterns requires a White Confirmation Line.

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

 

[osho67]

Hi NihabaAshi

I would like to get into candlestick patterns. I am day trading mostly YM and ER2.Will candlestick work for daytraders?Opinion from all much welcome. Thanks