Candlesticks

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Hi,
I was just wondering if somebody could explain to me what a "Hammer" pattern is in candlesticks and how to identify them. Thank you.
 
Hammer / Dragonfly Doji Bullish

Pattern: Reversal

Trend: Bullish
Reliability: Low/Moderate




How to Identify it

· Small real body at the upper end of the trading range

· Lower shadow at least twice as long as the real body

· No (or almost no) upper shadow

What it Means

There is a sharp sell off after the market opens during a downtrend. However, by the end of the trading day, the market closes at or near its high for the day. This signifies a weakening of the previous bearish sentiment, especially if the real body is white (the close is higher than the open price). Since the certainty for a Hammer indicator is low, the trend reversal can be confirmed by a higher open and an even higher close on the next trading day. If the open and the close are identical, the indicator is considered a Dragonfly Doji. The Dragonfly Doji has a higher reliability associated with it than a Hammer.






Inverted Hammer / Gravestone Doji Bullish

Pattern: Reversal

Trend: Bullish
Reliability: Low/Moderate



How to Identify it

· Small real body at the lower end of the trading range

· Upper shadow usually no more than twice as long as the real body

· No (or almost no) lower shadow

What it Means

As the market opens below the close of the previous day, the bulls rally briefly, but not enough to close above the previous day’s close. As this leaves shorts in a losing position, the Inverted Hammer presents the potential for an upcoming rally. Confirmation of the trend reversal would by an opening above the body of the Inverted Hammer on the next trading day. If the open and the close are identical, the indicator is considered a Gravestone Doji. The Gravestone Doji has a higher reliability associated with it than an Inverted Hammer.



Hammer / Dragonfly Doji Bullish

Pattern: Reversal

Trend: Bullish
Reliability: Low/Moderate



How to Identify it

· Small real body at the upper end of the trading range

· Lower shadow at least twice as long as the real body

· No (or almost no) upper shadow

What it Means

There is a sharp sell off after the market opens during a downtrend. However, by the end of the trading day, the market closes at or near its high for the day. This signifies a weakening of the previous bearish sentiment, especially if the real body is white (the close is higher than the open price). Since the certainty for a Hammer indicator is low, the trend reversal can be confirmed by a higher open and an even higher close on the next trading day. If the open and the close are identical, the indicator is considered a Dragonfly Doji. The Dragonfly Doji has a higher reliability associated with it than a Hammer.

All this is from a site called litwick....if you click any blue underlined then it will take you to that site....

I think it was Helenq who gave pointers for this site...I don't remember the source of this site..
 
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The thing with patterns regardless of what they are called is where they form. Trading certain patterns can be profitable as long as you trade them in line with other tools in high probability trade set ups.

HTH

NB
 
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