Trading Hammers (revisited)

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Quote from KPCURRENCY:

Sensei;

I believe this is a Bullish White Hammer Pattern via the rules that we are discussing here.

Question:

Does the dark WRB meet the requirements of YOUR contingency plan?

* I note that the WRB is lower than the low of the Prior dark WRB.

* I note that the WRB is lower than the open of the white hammer line.

* I note that the candle prior to the dark WRB is a VSA No Demand. While you do not use VSA, this represents a contraction of Volatility.
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Hi KPCURRENCY,

There's those infamous three consecutive down dark lines prior to the White Hammer Line.

Thus, the Close of White Hammer Line must be greater than the Open of the most recent prior Dark Line to be valid.

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* If the prior three intervals before the White Hammer Line are three consecutive dark candlestick lines...

Close of White Hammer Line (c1) must be > Open of the most recent Dark Line

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Simply, you don't have a valid bullish pattern.

That negates the Dark WRB as a contingency plan.

What chart interval is your EuroFX because I'm unable to duplicate it on my system?

By the way, do you know what caused that price drop?

I was watching as it occurred and couldn't determine what was going on with the price action from my news sources.

Thus, I got a bullish signal (something different from a hammer) and I ignored it due to the fact I didn't know what was going on.

The bullish pattern I ignored would have resulted as a loss had I taken the trade without understanding what was going on. :(

Mark
 
Quote from cmoney77:

Bullish dark hammer on 5 min chart of ZG. Copper prices made new highs overnight as well as silver being initially higher. My esignal was down at the time this occured but I would have gotten long at 667.9 and exited 668.9 based on using the 3 prev intervals of the the bullish dark hammer. I have a feeling that I'm using pt.1 wrong based on looking at your chart here.

http://www.elitetrader.com/vb/attachment.php?s=&postid=840557

Pt. 1 seems to be higher than the sum of c3,c4, and c5. I could be looking at it wrong or I could be making up rules I though I've read. I apologize if I'm taking this thread backwards but I want to get the basics down before I get ahead of myself. Perhaps I already am.

Rob
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Hi Rob,

The White Line confirmation is what you have labeled as pt 1 although I'm not sure what your pt 1 stands for.

Anyways, when I compare the long lower shadow of the Dark Hammer Line to the shadows and bodies of the prior three intervals...

The lower shadow is longer (has more depth) than the lower shadows of the prior three intervals.

Therefore, when comparing the shadows...that's ok.

However, the lower shadow does not have more depth than one of the prior three bodies that's labeled on your chart as c5.

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* Long Lower Shadow of the Dark Line (c2) must have more depth (longer) than the bodies of the prior three intervals.

However, if there's a Dark WRB among the prior three intervals...

Do not compare the Long Lower Shadow of the Dark Line (c2) to the body of the Dark WRB.

Instead, the Long Lower Shadow of the Dark Line (c2) must have more depth (longer) than the bodies of the three intervals that occurred before the Dark WRB.

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By the way, you should take a look at the 2min chart of ZG (see attachment).

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

Attachments

Thank you sensei.

Note to self:

do not get excited just because you see a white hammer. IT IS ABOUT THE PRICE ACTION LEADING UP TO THE HAMMER LINE THAT DEFINES ITS VALIDITY.

As for what caused the WRB, I too missed that.

Another note to self:

Ignore the news, but be cognizant of when news is released.

Chart interval 30 minutes.
 
Sensei;

3 dark lines prior to the white hammer line ...............

I can see that means there is a lot of supply to overcome in that type of price action.

The rules do make sense. Sometimes they can be a bit overwhelming but they make perfect sense. Yet again your logic and mastery humbles me.
 
White Bullish Hammer on 5 min. chart of ym. Oil dropping on news of Iran's president stating the release of British sailors in captivity provided the volatility spike after the WBH. My pt. 1 and pt.2 represent where I would exit the trade.


The bullish dark hammer at 12:40 I wouldn't take as I didn't have any reason for why it occurred. Had I taken though, am I correct that once the 1st two intervals after BDH don't close about the prior red bar to the BDH that it's time to exit the trade?

Rob
 

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Quote from KPCURRENCY:

Sensei;

Yet again your logic and mastery humbles me.
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Did I accidentally walk into a Karate class by mistake?...:confused:

If I did, I hope it is Shorin-Ryu...:p
 
Quote from cmoney77:

White Bullish Hammer on 5 min. chart of ym. Oil dropping on news of Iran's president stating the release of British sailors in captivity provided the volatility spike after the WBH. My pt. 1 and pt.2 represent where I would exit the trade.

http://www.elitetrader.com/vb/attachment.php?s=&postid=1424247

The bullish dark hammer at 12:40 I wouldn't take as I didn't have any reason for why it occurred. Had I taken though, am I correct that once the 1st two intervals after BDH don't close about the prior red bar to the BDH that it's time to exit the trade?

Rob
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Hi Rob,

Thanks for the annotated chart example.

That's a good looking Bullish White Hammer and it had it's close above the open of the prior dark line which is important due to the fact the prior three intervals were consecutive down dark lines.

As for what you labeled as a Bullish Dark Hammer...its not the one I'm discussing in this thread.

The one I'm discussing as mentioned many times has the White confirmation line to be a White WRB (c1) that has a body that engulfs the body of dark line (c3).

However, your Dark Hammer Line (c2) should have prompt you to look at a lower interval to see if there was something valid when there wasn't anything valid on the 5min chart in that particular price action.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 
April 19th Thursday

NYMEX Light Crude Oil - CL

Bullish White Hammer Pattern
Trend Signal Designation: trend reversal

Today's Key News:

"Crude hit by China rate concerns after strong GDP - Oil prices sink to lowest level since April 11; natural-gas prices retreat."

http://www.marketwatch.com/news/sto...x?guid={AF15DAD1-D05C-4509-8ECF-31BF757071A9}

I guess that's why today's Bullish White Hammer patterns didn't have much of a chance for profits. :D

In addition, with news like that involving China's rate hike concerns...

It's best to ignore Bullish White Hammer patterns today but if you didn't...there was a contingency plan that should have saved anyone's butt that has a plan B when plan A doesn't work.

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

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Quote from NihabaAshi:

Euronext Futures - CAC40

Bearish Dark Inverted Hammer

NihabaAshi
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Hi there NihabaAshi,

Thx for the thread. I'm going through it from the beginning. Early in the thread (think at page 5) you posted this one of the CAC40.

I'm not sure why you qualify that as a bearish price action. I thought one of the criteria was that the shadow was longer than the shadows of the price action leading into it?

http://www.elitetrader.com/vb/attachment.php?s=&postid=806171

Thanks in advance for your reply.

Best regards,
MK
 
Quote from MidKnight:

Hi there NihabaAshi,

Thx for the thread. I'm going through it from the beginning. Early in the thread (think at page 5) you posted this one of the CAC40.

I'm not sure why you qualify that as a bearish price action. I thought one of the criteria was that the shadow was longer than the shadows of the price action leading into it?

http://www.elitetrader.com/vb/attachment.php?s=&postid=806171

Thanks in advance for your reply.

Best regards,
MK
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Hi MK,

Thanks for the message post.

Can you post the direct link where I said the the the the shadow was longer than the shadows of the price action leading into it or anything similar for the Dark Inverted Hammer?

Thanks.

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