Hi romik, Here's the basic criteria for the White Hammer Line I use for discussion in this thread... * Body > Upper Shadow * Long Lower Shadow > Body + Upper Shadow * Long Lower Shadow is 3x longer than Upper Shadow Thus, upper shadow is tolerated. Mark (a.k.a. NihabaAshi) Japanese Candlestick term
Hi, Is that a bearish Hammer line @ 10.35am? No lower shadow, though upper shadow much greater than body?
Hi romik, You may want to read this thread from the beginning to prevent getting confused about what is what. Here are some things I discussed in-depth in the thread so far that relates to your question: * Difference between a Hammer Line and a Hammer Pattern. * Difference between Dark Inverted Hammer Lines and White Inverted Hammer Lines. * Define the price action that leads into the Hammer Line. All the above are talked about several times with specific details about the criteria (rules). With that said... What your talking about on your chart is actually a White Inverted Hammer Line and for you to say its bearish would imply its a Bearish White Inverted Hammer Pattern. Regardless its reliability is very low. In addition, review my discussion in this thread with the trader name sunnyskies about Bearish White Inverted Hammer Patterns. However, if you remove the word bearish from your question... My answer is YES...its a White Inverted Hammer Line. Also, via your chart...looks like you had other White Inverted Hammer Lines that completed @ 1050am est and 1205pm est. Let me give you a big hint...I don't trade nor risk a single penny on that particular type of Hammer Line even if it traverses into a Bearish Hammer Pattern via the price action that leads into the Hammer Line. Further, as I mentioned earlier in this thread...White Inverted Hammer Lines have a bullish tendency about them. (I don't trade this tendency because I don't have a trading plan for such.) Therefore, the key to me would seem that if someone wants to research and find a way to discover their bearish tendency is to analyze the intervals that occurs after the White Inverted Hammer Line to discover possible reliable patterns that involves that Hammer Line. By the way, the patterns I myself am discussing in this thread (as explained many times) are the following: * Bullish White Hammer Patterns (one particular sub-group) * Bearish Dark Inverted Hammer Patterns (one particular sub-group) * Bullish Dark Hammer Patterns (one particular sub-group) Yet, you are more than welcome to discuss your criteria or rules for other types of different Hammer patterns (including White Inverted Hammer Lines or Patterns) because that's what this thread is all about... Discussing Hammers and their sub-groups. Thanks for the chart example. Mark (a.k.a. NihabaAshi) Japanese Candlestick term
Not trying to kiss ass here, but having read through this thread I think that any trader on ET who is not paying attention to your generous FREE explanations, is either doing OK or an ignorant fool. Really appreciate you helping others. I've always said, help others and you'll be rewarded in the years to come. Well done Mark.
Hi romik, Thanks for the chart and comments. Your chart is a valid Bullish Dark Hammer Pattern but not via the particular sub-group I'm discussing in this thread. Via the discussion I'm discussing...the below rule disqualified your chart: * Close of White Line (c1) must be < or = Highest High among the prior three intervals. http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=5&pagenumber=53 (specific rules discussed at the above link) Now...I'll briefly mention why it is a valid Bullish Dark Hammer pattern via a different sub-group. Remember in my recent posts in this thread I discussed how WRBs and Long Shadows are key candlestick s/r zones. Look at your chart again and you'll see a Dark WRB that completed itself @ 1035am est. The close of the White WRB Line (c1) has closed within the body range (zone) of that key Dark WRB. That's another type of Bullish Dark Hammer pattern that involves a prior Dark WRB as a criteria for the trade signal. However, in that example...its a low reliable pattern if the close of the White WRB Line (c1) < mid-point of the Dark WRB Body. Reliability improves if the White WRB Line (c1) > mid-point of the Dark WRB Body. As I mention...this is not a particular sub-group I want to discuss because its far too much info, gets too far into some advance price action only info that has nothing to do with Japanese Candlestick analysis and there's many other rules involved. With that said...back to the Bullish Dark Hammer pattern sub-group I want to talk about...here's another rule not discussed: * Interval (c3) must be a Dark Line In your chart its a White Line and is another reason why your chart doesn't qualify for the particular Bullish Dark Hammer pattern I'm discussing in this thread. Lets pretend that was a valid sub-group via what I'm discussing in this thread... That trade would have resulted in either a breakeven trade or +1 tick profit. Here's why and not shown on your chart... As I mention early in this thread in my discussions with sunnyskies...trade management is key regardless if you use Japanese Candlesticks or not. With that said...I personally use what I call a trigger price (if reached as a profitable position so far) to tell me when its time to move my initial/stop protection into either a breakeven trade or +1 tick profit trade. I also mention in that discussion with sunnyskies that when I trade ES my trigger price is +1 point profit. Simply, when ES moves in my favor by +1 point profit...that's when I make the adjustment in my stop/loss management. Obviously if I'm trading a different trading instrument, I'll be using a different designated trigger price to adjust my initial stop/loss protection into a worst case scenario as a breakeven trade. Just remember a key trading rule...don't make it a habit of letting profitable trades become losing trades via either taking profits when profit targets are reached or adjusting your stops when particular price levels are reached in your favor. Also, someone once asked me via email after I first mentioned that in this thread about what to do if either the breakeven stop or +1 tick stop is hit and the price then reverses to move strongly in your favor without you on board the profit train. My reply was that its important to have a complete trading plan for any method regardless if your trading a candlestick pattern or not. * Pattern Signal * Entry Signal * Stop Management Method * Profit Target Method * Re-Entry Method * Contingency Plan Method The above should be the basic of a complete trading plan. Thus, you may not get a re-entry signal after all stop outs (profit or loss) but the few times you do get a re-entry signal is worth the effort for having such in your trading plan. Something else...whenever you see a long lower shadow Dark Hammer Line or any type of long shadows that's part of the Long Shadow Family (lines are not tradable by itself)... http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=5&pagenumber=42 Take a quick peak at the lower chart intervals of that Dark Hammer Line to see if there are any Bullish White Hammer patterns, Bullish Dark Hammer patterns or bullish patterns of anything else you may be using. (Via your 5min chart I would have taken a quick peak at the 3min and 2min charts) My point is this...all pattern signals have clues or hints that occurs just minutes before you get an actual trade signal and changing your perspective during those hints may reveal another pattern signal that allows a better entry price... Learning and understanding what to look for as early clues will make you that much better prepared to trade and prevent missed trade opportunities, increase your profit potential or give you more breathing room to survive those infamous wiggle retracements prior to the profit train leaving the station. (last thing you want to be doing is trying to rush and get your order entry up especially in a fast moving market) Last of all, don't forget to keep SPX.X Index, AMEX SPY or any other related S&P 500 chart side by side or in view with your ES Emini chart because there may be a valid Hammer pattern trade on one of those other charts that merits a trade in ES eventhough ES itself has no valid Hammer pattern trade. Mark (a.k.a. NihabaAshi) Japanese Candlestick term
Hi, Very good thread. Thank you. Please see attached chart and comments. Was this a white bullish hammer or did I read it wrong ? Thanks, Raz
Hi Razor, Thanks for the chart. I recently talked about this particular price action in my discussions with gotta_trade. http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880&perpage=5&pagenumber=89 It's not a valid pattern signal via the explanation at the above link. The specific quote from the link above that matters is this... With that said...here's what's very interesting about that White Hammer Line that appeared on your YM 5min chart closing @ 1020am est. To relate to my recent comments to romik...had you lowered your chart interval after seeing that White Hammer Line formed and saw that it was not a valid pattern signal after an entry into the trade... Via the 2min chart there was another White Hammer Line @ 1018am est that was not a valid pattern. However, 5 intervals later @ 1028am est a contingency plan signal appeared to reverse your Long position into a Short position had you mistakenly taken what you thought was a Bullish White Hammer pattern. That's a full 8mins to prepare for the worst case scenario after your entry...a scenario that appeared and would have allowed you to profit from. Thus, that Short signal would have easily compensated for the loss in the Long position and finish the 2 trades very profitable. You can do a search on my comments in this thread via typing NihabaAshi Contingency Plan to see what I said to sunnyskies along with viewing chart examples. http://www.elitetrader.com/vb/search.php?s= I intentionally make it easy to research any comments by me via including my ET alias at the bottom of my posts. Last of all, I do not recommend trading contingency plan signals as entry signals all by themselves until your consistently profitable trading Hammer patterns themselves. This forces you to learn how to put your underwear on first prior to learning how to put on your pants. Once again...thanks for the chart. Mark (a.k.a. NihabaAshi) Japanese Candlestick term