Actually, I prefer talking about "failed hammer patterns" because they are just as educational and provide a wealth of information about the price action being traded. With that said, tell me what price action your trading and I'll review the charts to look for failed hammer patterns. In the meantime, yourself can look for failed hammer patterns and post charts too for me to review.
Hi Mark, I'm working through this very good thread. If that's OK for you I'd like to submit few charts for your analysis. Here is one AUDNZD 15min chart, is it a valid white hammer (see above green triangle) ? Thanks.
That's a blurry chart...it hurt my eyes Joking aside, its a white hammer line (interval is color green on your chart).
Wow, quick reply thanks ! All the shadows are hurting my eyes too but the white (or green if you want ) seemed legit, that's why I'm asking. What about that one - EURAUD 15 Min May 14th? With preceding price action a bit cleaner... Just want to be sure I've correclty gathered all the rules (it was a bit of work to be honest !).
Maybe its me but you should use a different image capture because its making your charts blurry. Regardless, its a white hammer line but not a valid white hammer pattern. As stated earlier in this thread, there's an enormous difference between Line versus Pattern. In addition, you should not remove the X/Y axis information. Doing such you're removing information that may add to the market context. For example, I try to correlate your chart of Forex EurAud with my chart for the May 14th price duration...my chart is not even close to looking line your price action. Usually, I don't comment on any charts without the X/Y axis info because market context is very important to Japanese Candlestick analysis. Also, it looks like there's a bunch of consecutive down intervals before that hammer line. As discussed early in this thread...avoid trading to the Long side those types of hammer lines. There more bearish than bullish.
Thanks for your reply. I've added the axis (Paris time) and used an other format so I hope it will be better ! I do understand the importance of market context and the difference between a line and a pattern. But strictly speaking about the pattern, what is wrong ? the previous red bars, the preceding dark hammer line ... ? Maybe, I should explain what I'm trying to do. I'd like to code the 3 patterns you explained in this thread, scan the market (FX and maybe stocks at a later stage) and decide if the pattern is worth a trade considering market context. I already do that with other patterns cause I prefer coding and working on new strategies and be alerted whenever a possible setup happens. I'd be more than happy to share the code with you if you want to help me (I use amibroker).
Yeah, its a white (green) hammer line but not a valid white (green) hammer pattern. What's wrong with the pattern ? As stated earlier in this thread, those consecutive preceding dark (red) lines killed the pattern. Essentially, forcing the price action after the white hammer line to do something bullish and forcing the white hammer line itself to close a little higher (review the rules about such that you've learned so far in this thread)...that price action afterwards stayed bearish. By the way, thanks for your explanation about the coding. Therefore, the following commentary is not aimed at you. It's aimed at those that may be reading this thread and forgotten what I've said about coding of Japanese Candlestick patterns. Its EASY to code Japanese Candlestick patterns and I'm not interested in coding because I can easily identify them in real-time. I do not recommend using Japanese Candlestick patterns alone and coders will often forget such. Japanese Candlestick patterns were not designed (originated) to be used as such. Simply, most coders will be tempted to use coding of candlestick patterns for trading purposes instead of for "identification purpose" only during their learning process. Note: I tried the coding route earlier in my trading career. It distracted me from learning how to trade because I failed to ensure everything else in my trading plan was setup. Therefore, if someone is having problems identifying them, most likely its because that trader is trying to learn too many of them instead of just trying to learn only one until he/she mastered it. As stated, coding can help in the identification process of candlestick patterns until they've learn how to do such without coding and in real-time without any hindsight analysis. Further, just to clear, a trader should already know the market context, market direction prior to the appearance of any type of trade signal. Thus, candlestick patterns are just entry signals to tell you when to enter that market direction. Simply, candlestick patterns are just 1/3 of the puzzle and I highly don't recommend trying to apply them alone without the other key components that are more important.
Thank you very much wrbtrader for this very detailed and deeply interesting thread, I have been reading through since the weekend, I was searching online and came across this thread by accident, my first post on the forum and I am very glad that I did find this thread and may I say I very much appreciate the vast info you have shared, the way that you communicate your charts/techniques is fascinating. I am about halfway through the thread and have been taking notes with focus on the 'White Bullish Hammer' first, I've spotted a few of these lovely hammers on the EUR/AUD currency 1 hour charts, please may I ask you to have a quick peek at the charts attached. I would like to research and test to see if these patterns can be used in a longer term trend trading strategy/continuations of the 1h/4h charts, running with the trend. Thank you kindly for sharing your knowledge.