Trading Hammers (revisited)

Status
Not open for further replies.
HI Mark,

In the following YM 5 min. chart...I have two questions.

1. Concerning the Dark Hammer line, C1 does not engulf C3 which would make the Dark Hammer invalid.

However, C3 is a WRB and according to the following rule:

* White WRB body > than bodies of prior 3 lines unless one is a Dark WRB, then...White WRB body > than the bodies of the prior 3 line to the Dark WRB.

Does this rule imply that C1 doesn't have to engulf C3 if C3 is a Dark WRB?

2. Concerning the White Hammer line...

One of the rules state:

* 3 prior lines must have at least 1 dark line with a low > than open of White Hammer line.

The line prior to the Dark WRB is a doji. Being that a doji is neither a white line or a dark line, would you automatically discard this as a valid setup...or consider this setup as a possible trade?

T.M.
 

Attachments

Quote from T.M.:

HI Mark,

In the following YM 5 min. chart...I have two questions.

1. Concerning the Dark Hammer line, C1 does not engulf C3 which would make the Dark Hammer invalid.

However, C3 is a WRB and according to the following rule:

* White WRB body > than bodies of prior 3 lines unless one is a Dark WRB, then...White WRB body > than the bodies of the prior 3 line to the Dark WRB.

Does this rule imply that C1 doesn't have to engulf C3 if C3 is a Dark WRB?

2. Concerning the White Hammer line...

One of the rules state:

* 3 prior lines must have at least 1 dark line with a low > than open of White Hammer line.

http://www.elitetrader.com/vb/attachment.php?s=&postid=1414725

The line prior to the Dark WRB is a doji. Being that a doji is neither a white line or a dark line, would you automatically discard this as a valid setup...or consider this setup as a possible trade?

T.M.
More...

Hi T.M.

Answer to your Question #1:

The White Line (c1) must always be a White WRB that's engulfing the body of the Dark Line (c3).

Thus, c3 can be a Dark WRB but it still must have its body engulfed by the White Line c1.

However, I do understand what your saying and do see the part that seems confusing.

Good question by the way.

Answer to your Question #2:

I do consider that a valid setup but a different type of Bullish White Hammer pattern.

However, when you see that doji in that particular situation...take a look at a correlated price action of another trading instrument to see if it has a dark line or white line instead of a doji...

To possibly merit a sister trade when your trading instrument doesn't have a valid pattern signal while another trading instrument that's correlated has a valid pattern signal.

Example, you trade ES but it has the doji while the SPY has a dark line and a valid pattern signal.

This would allow you to take the trade in ES.

Also, that particular proces (sister trading instrument) will get you familar with simple aspects of intermarket analysis.

By the way, in your chart example...one of the three lines before the Dark WRB is a Dark Line with its > Open of the White Hammer Line.

Thus, that Dark WRB should have you comparing the White Hammer Line to the three intervals prior to the Dark WRB to look for a Dark Line with its low greater than the open of the White Hammer Line.

Therefore, its a valid pattern signal of the particular type of Bullish White Hammer pattern I'm discussing.

Now, had there been no Dark Lines had there not been a Dark WRB or no Dark Lines prior to an existing Dark WRB...

That's when the appearance of a Doji changes the price action and makes it a different subgroup.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 
Mark, thanks for getting back to me about this. Yes, I think that's what I'll use that for right now, an S/R zone.

Quote from NihabaAshi:



Stay on the sidelines and use that type of volatility spike as a key s/r zone.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
More...
 
Quote from cashmoney69:

Do you consider a hanging man candle just as important as a hammer in a down trend?

cm
More...

Hi cashmoney69,

Can you post a chart example of this type of price action.

Thanks.

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

Answer to your Question #1:

The White Line (c1) must always be a White WRB that's engulfing the body of the Dark Line (c3).

Thus, c3 can be a Dark WRB but it still must have its body engulfed by the White Line c1.
More...

hi NA,
regarding your rule for this dark hammer

Why is it so important that the C1 engulfs C3 ?

What does it tell you about demand/supply in the market ?

Is there a story about buyers and sellers behind this or it is simply by your experiences, that this works ?

thank you
 
Hi Mark...

Thanks for the explanation concerning my two questions.

I am very impressed with this thread and have gained valuable knowledge about Hammer setups.

Keep this thread going. You have mentioned that all the rules have not been revealed. I am anxiously awaiting the remaining rules. Thank you very much...

By the way...will you be presenting you views on other candlestick trading patterns in the future?

T.M.
 
Status
Not open for further replies.
Back
Top