I'm trying to understand something. Let's take "white bullish hammer patterns". OK. So there's some conditions for the pattern itself in addition to the classic pattern definition which is very small body, small upper shadow and long lower shadow: 1) lower shadow of hammer should be the longest of last 4 candles 2) more rules? Then there's rules for preceding price action: 1) Low of the hammer should be the lowest low of last 4 candles. 2) more rules? It seems like there's more rules but I dont know what they are. And havent been able to gather from your chart examples.
Hi sunnyskies, As you already know from prior conversations with you... Profit targets are WRBs. If Long...profit targets are WRB's that occurs at a higher price above the Long. If Short...profit targets are WRB's that occurs at a lower price below the Short. The above is via prior conversation so you must be talking about the WRB itself. As explained in this thread and the prior Hammer thread about my interpretation of a WRB... WRB (wide range body) > Prior three bodies The number three is not magical and you can use 4,5, 6 or whatever. The above has already been discussed in this thread. What exactly is voodoo to you about the above ??? However, I will expand on this topic a little more⦠Someone recently told me they prefer to use the words expansion body instead of WRB or instead of Expansion Range. Range = Difference between high and low (Iâve see this term used in general TA discussions especially when using bar charts) Body = Difference between close and open (This term tend to be used in Japanese Candlesticks discussions) Yes (before you ask)...range and body can be the same if in the case of a White WRB when the high = close and the low = open Nowâ¦the only thing I can think that may be confusing to you to prompt you to say its like voodoo is that your ONLY looking at the charts. In my annotated charts youâll see the use of the words pt (profit target levels). Youâll also see in the charts that once an interval becomes a WRB (prior to the interval completing itself)â¦itâs a WRB and profits should be taken. Exampleâ¦lets say your Pattern Signal is via the 15min chart interval at 10am est. The next interval starts at 1015am est. However, the current interval becomes a WRB at 1012am estâ¦3mins remaining in the interval formation. If you stay in the trade beyond the WRB levelâ¦its pure greed and your at risk of seeing price retrace until its no longer a WRB upon completion at 1015am est. I will often let it ride (stay longer) because Iâm very familiar with WRB and the fact that I will often drop to a lower chart interval to see if there are any continuation signals to tell me itâs a good time to get greedy. If you exit the trade prior to the WRB level being reachedâ¦your obviously either leaving money on the table or got a trade signal that will threaten your current open position. With that said above (hopefully its not still voodoo to you)⦠Thereâs a difference between WRB in my Pattern Signal and a WRB in my Profit Targets. ⢠Pattern Signal WRBs are WRBs upon completion of the interval. ⢠Profit Target WRBs are WRBs that can form prior to the interval completing itself. Regardless if its a white WRB or a dark WRB... It's more like a zone via area between the Close and the Open. Via a past conversation here at ET in the thread by Riskshaw Man called Are we at Support that included the following chart example I posted... http://www.elitetrader.com/vb/attachment.php?s=&postid=716793 In that annotated chart are what I call candlestick s/r levels via WRBs. Simply, after the formation of a WRB... I start preparing to trade because a trade signal is most likely sooner than later. Thus, WRB tend to represent a zone area and not a specific price like a line drawn in the sand. Therefore, sometimes when I'm at a profit and the current interval hasn't produced a WRB to tell me its time to exit the trade... If price has reached the zone area of a prior WRB...I'll exit the position prior to the current price action becomes a WRB itself. I don't do that all the time...just sometimes. Of course there are more rules. I will not discuss all the rules for the particular Bullish White Hammer, Bullish Dark Hammer and Bearish Dark Inverted Hammer in this thread all at once in one message post... Handing it to someone on a silver platter. Yet, I will only reveal/discuss each rule as I respond to traders posting chart examples and asking questions about the price action in their chart examples... This ensures a level of participation Iâm satisfied with. My point with that as you know... Is to force the reader to learn to understand the price action and its pattern... As they slowly piece the puzzle together with my help and with the help of others that have so far been posting charts. By the way...please re-read the thread and look for a post where I categorized the types of patterns I'm discussing... Print it out or write it down or save a direct link to that message post. Also while your re-reading...you will find that I've discussed more rules than what you think so far via saying the below quote: Once againâ¦yes to answer your above questions... There has been more rules discussed in this thread so far than the 2 rules you've posted above... Two rules you've posted incorrectly. The rules I've discussed so far all correlate to the chart examples I've posted so far. In addition, I will talk about more rules as this thread progresses. Eventually, all rules about the Pattern Signal itself for each of the Hammers I'm discussing in this thread (Bullish White Hammer, Bullish Dark Hammer, Bearish Dark Inverted Hammer) will be disclosed and I will nicely put in categorize it. I also plan (have been so far) to discuss some (not all) of the trade management stuff that occurs after entry so as the profit target discussion above concerning WRBs. When will I reveal all the rules ??? After a hundred or so charts by me and at it will only be posted to those interested via pm after I ask the moderator to close the thread. Until then...your just going to need to read carefully (continue reading until the thread concludes) and write down whatever rules that were stated by me and make sure you put them under the right Hammer sub-group along with the chart examples⦠http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=1&pagenumber=72 Hopefully, others will do the same about whatever Hammer patterns they are trading so that this thread is more than about my three patterns and its sub-groups. With that said... Besides...there's no rush on revealing all the rules all at once because the market will be here next week, next month and next year. Hopefully, before this thread concludesâ¦youâll be able to answer your own questions and then show verification of your understanding via posting your own charts of Hammer patterns. NihabaAshi
August 19th Friday Eurex Derivative - DAX Bullish White Hammer pattern sub-group (bullish reversal) ------------- You should notice in all the Bullish White Hammer (bullish reversal) pattern charts that I've posted so far... All have a dark WRB among the prior three intervals. When that happens...the lower shadow of the White Hammer Line must be measured (compared) to the price action of the three intervals prior to the dark WRB and to any intervals between the dark WRB and the White Hammer Line. However, if there's no dark WRB among the prior three intervals (such is ok)... The White Hammer Line long lower shadow is measured (compared) to the price action of the prior three intervals as represented in the attached chart below. (Note: I'm comparing the long lower shadow to the bodies and lower shadows of the prior intervals except the dark WRB.) By the way...in the attached chart there are also two Dark Inverted Hammer Lines that had their respected long upper shadow engulf the body of a prior interval...an interval that's between the white WRB and the Dark Inverted Hammer Line as required by one of the rules (as mentioned before). Market was exhausted after all those rising white WRBs and one of those Dark Inverted Hammer lines traversed into a Bearish Dark Inverted Hammer (bearish reversal) pattern. NihabaAshi
NihabaAshi, I'm following your thread here with great interest. I truly appreciate the time you take to explain things. I am, however, a bit lost. I feel like I have walked in on a 300-level course and I'm a freshman with core courses only. Don't get me wrong... I have plenty of trading experience and know a fair bit about charts and trading in general. I'm getting my feet wet with candlesticks beyond identifying the formations by themselves on a chart. However, I am wondering if there isn't a resource you would recommend to get up to speed (I have Nison's original book) more quickly than going through a whole book. I have scanned for your prior messages, but there is a ton of information and putting it all together from different threads is quite labor-intensive. If you can point me to something that would explain the meaning of formations in given setups (prior 3 bar or whatever the case may be) - if such a thing exists, then I would be grateful and so will others trying to follow this thread and your effort.
Also, I was wondering if you can elaborate on your exit strategy as shown on the DAX chart you attached. I understand from your prior response that you base your exit on a WRB and may go to a smaller interval to pinpoint it before the bar closes. I was wondering, however, what would trigger an exit. Do you also watch T&S? Do you wait for a pull-back of a certain degree? If this is proprietary info, then please disregard. I still appreciate the info you are sharing. Thanks.
Finally, I wanted to ask the following: 1. Where in the hammer formation do you enter after it has closed? I'm assuming you wait for it to close prior to initiating a trade. 2. Is your stop beneath the hammer shadow plus a tick (I know you don't use fixed stop values)? 3. What happens if you don't react fast enough to a hammer formation like the one shown on the DAX chart? Do you use another setup to enter while it is trending up with minor retracements? As always, your insight is appreciated. I'm learning to look more at the charts now rather than to be a pure DOM / T&S scalper, so this another threads you have contributed to have caught my attention. Best regards.
others may have better recommendations, but here are some links that may help: http://stockcharts.com/education/ChartAnalysis/CandlestickDictionary.htm http://www.daytradersbulletin.com/html/cs1.html http://www.hotcandlestick.com/candles.htm http://www.candlestickforum.com/candlestick_analysis_4.html http://www.iqchart.com/education/candle.asp http://www.iqchart.com/101/candle.asp http://www.aspenres.com/Documents/pdf/Candlesticks.pdf http://www.fxstreet.com/images/fxtsp/FXTSPCandlestickPatterns.pdf http://www.vss2000.com/support/iChartPROc.asp i'm sure there will be a variety of levels covered as well as much overlapping of info. i haven't gone through any of the sights, so i won't try to rate or prioritize the list. hth take care - omni
OK, here's my understand of profit targets so far. Your profit targets are all derived from WRBs. WRBs either from the timeframe where you took the signal or other timeframe. Which timeframe you use to find the WRB gets tricky although you tried to explain it. Now a crucial question. If I'm long via some pattern - then I look for WRBs that occured above in the past. Suppose I find one. Where will the actual target be? At the high of WRB, at the low, at the close, midline, where?