GroundStone Holdings Morning Newsletter

GroundStone Holdings

Active member
144 2
How to trade double bottom pattern?

Double Bottom
The double bottom is also a trend reversal formation, but this time we are looking to go long instead of short.

These formations occur after extended downtrends when two valleys or “bottoms” have been formed.

groundstoneholdings-How-to-trade-double-bottom-pattern.png


You can see from the chart above that after the previous downtrend, the price formed two valleys because it wasn’t able to go below a certain level.

Notice how the second bottom wasn’t able to significantly break the first bottom.

This is a sign that the selling pressure is about finished, and that a reversal is about to occur.

The price broke the neckline and made a nice move up.

See how the price jumped by almost the same height as that of the double bottom formation?

Remember, just like double tops, double bottoms are also trend reversal formations.

You’ll want to look for these after a strong downtrend.
 

GroundStone Holdings

Active member
144 2
Morning Technical Newsletter

EUR/USD
The dollar was higher on Monday against its primary trading partners as investors remained committed to the safe-haven currency after a massive global equity selloff at the end of last week. The selloff was prompted by concerns about geopolitical unrest, the continuing trade war between China and the United States and shaky corporate earnings reports. The dollar traded near a ten-week high while the dollar index gained 0.11 percent by the mid-afternoon on Monday. The dollar index was trading at 96.47 .DXY as of 1:59 p.m. HK/SIN after hitting a high of 96.860 on Friday, its highest level since mid-August. The rising dollar has been cited as a reason for the global equity selloff, with the widening gap between the dollar and foreign currencies making it difficult for U.S. companies to sell their products overseas. Investors remain concerned about the strong dollar despite a run of solid earnings reports and stable profit growth.

The greenback gained 0.04 percent against the yen to trade at 111.93. It was up 0.02 percent against the British pound, and it rose 0.04 percent against the Canadian dollar. Only the Australian dollar bucked the trend, trading 0.06 percent higher against the dollar on Monday.

Commodities Movements
Oil prices were broadly lower on Monday, with U.S. WTI futures down 0.37 percent to $67.34 per barrel and Brent crude futures down 0.32 percent to $77.37 per barrel. The commodity was under pressure after last week’s selloff prompted investors to worry that an economic slowdown would reduce demand and constrict oil prices further. Also pressuring oil markets is the upcoming implementation of U.S. sanctions against Iranian crude exports which are set to start next week.

Gold prices were flat on Monday, trading at $1,235.90 per ounce.

MORE ON WEBSITE...

groundstoneholdings-morning-newsletter-eurusd-18.png


APPLE:
groundstoneholdings-morning-newsletter-apple-17.png


SPX:
groundstoneholdings-morning-newsletter-spx-16.png


BITCOIN:
groundstoneholdings-morning-newsletter-bitcoin-16.png


USOIL:
groundstoneholdings-morning-newsletter-usoil-17.png


GOLD:
groundstoneholdings-morning-newsletter-gold-16.png
 

GroundStone Holdings

Active member
144 2
Morning Technical Newsletter

Pound Higher but Brexit Worries Remain

The Pound Sterling edged higher but remains within striking distance of the recently struck 2-month trough as FX players await the annual budget speech from the British Finance Minister. Analysts believe that Philip Hammond will take the opportunity to encourage support for Theresa May’s Brexit plan in order to ensure that the UK economy is able to withstand the easing of austerity restrictions. Hammond will say that the move toward higher spending, a welcome sight after years of public service reductions, will only come with assurances that a Brexit agreement is reached.



As reported at 11:41 am (BST) in London, the GBP/USD was trading at $1.2837, a gain of 0.06%; the pair has ranged from a low of $1.2806 to $1.2843. The EUR/GBP is trading at 0.88862 Pence, down 0.03%; the pair moved off the session low of 0.88695 Pence while the high for the trading day was recorded at 0.89000 Pence.



More on our website...

EUR/USD
groundstoneholdings-morning-newsletter-eurusd-19.png


APPLE
groundstoneholdings-morning-newsletter-apple-18.png


SPX
groundstoneholdings-morning-newsletter-spx-17.png


BITCOIN
groundstoneholdings-morning-newsletter-bitcoin-17.png


USOIL
groundstoneholdings-morning-newsletter-usoil-18.png


GOLD
groundstoneholdings-morning-newsletter-gold-17.png
 

GroundStone Holdings

Active member
144 2
Morning Technical Newsletter

U.S. Dollar Hits 16-Month High

The U.S. dollar index hit a 16-month high on Wednesday after the Bank of Japan announced that it would be keeping monetary policy steady. Japan’s central bank also announced that it would cut its price forecasts, and it kept short-term interest rates at a target of minus 0.1 percent. The announcement confirmed market expectations that the BOJ will keep its extensive economic stimulus program going. The dollar index hit a 16-month high of 97.06 .DXY before easing slightly to 97.04 .DXY, where it was trading as of 1:57 p.m. HK/SIN.

The dollar gained against the yen, up 0.15 percent in the mid-afternoon to 113.25. It was up 0.17 percent against the Canadian dollar, to trade at 1.3127. The dollar was strengthened by continued concerns over the euro as well as U.S. consumer confidence which hit an 18-year high in October. The U.S. economy slowed less than expected in Q3, while the EU economy grew less than expected, shaking investor confidence in the region and the common currency. The euro was down 0.04 percent against the dollar on Wednesday afternoon. Also pressuring the euro was German Chancellor Angela Merkel’s announcement that she will be stepping down in 2021.

Stock Markets Crawl Back

Global stock markets bounced back on Tuesday and Wednesday, with Wall Street’s three major indexes all closing higher. The Dow Jones Industrial Average closed up 1.77 percent, the S&P 500 closed up 1.57 percent and the NASDAQ was 1.58 percent higher. The positive turn inspired Asian markets which were broadly higher. Japan’s Nikkei 225 was up 1.94 percent in the mid-afternoon, the Shanghai Composite was up 1.64 percent and the Shenzhen Composite was up 1.49 percent. Hong Kong’s Hang Seng index was also up over 1 percent.
MORE ON OUR WEBSITE...

EUR/USD:
groundstoneholdings-morning-newsletter-eurusd-20.png


APPLE:
groundstoneholdings-morning-newsletter-apple-19.png


SPX:
groundstoneholdings-morning-newsletter-spx-18.png


BITCOIN:
groundstoneholdings-morning-newsletter-bitcoin-18.png


USOIL:
groundstoneholdings-morning-newsletter-usoil-19.png


GOLD:
groundstoneholdings-morning-newsletter-gold-18.png
 

GroundStone Holdings

Active member
144 2
Morning Technical Newsletter

New Month, New Optimism?
Asian markets were broadly higher on Thursday after a second consecutive day of impressive gains on Wall Street and a solid run of earnings reports restored investor confidence. Hong Kong’s Hang Seng Index led the gains in Asia, heading 1.84 percent higher as of 2:07 p.m. HK/SIN. The Shenzhen Composite was up 1.31 percent while the Shanghai Composite managed to rain 0.53 percent. South Korea’s Kospi and Australia’s ASX 200 were both up 0.17 percent. Only Japan’s Nikkei 225 bucked the trend, easing 1.12 percent by the mid-afternoon.

On Wednesday, the NASDAQ closed just over 2 percent higher. The Dow Jones Industrial Average closed 0.97 percent higher. The S&P 500 ended the day 1.09 percent higher. The recent volatility in the U.S. stock markets has caused traders to ponder whether the recent dips were just a (long-expected) correction, or whether the selloffs were the start of an impending bear market. Despite several days of recovery, October was still difficult for the U.S. stock markets. The S&P 500 erased 1.91 trillion of value in October, reports CNBC, with the losses spreading across all industry sectors. The month was the worst month for the index since September 2011. There is hope however- October is known for being a historically volatile month, and many traders have renewed optimism that the recent movements were cyclical rather than a true sign of market sentiment.

Currency Movements
On the currency markets, the dollar index eased after several days of strong gains, falling 0.25 percent to 96.89 .DXY. The dollar was pressured by a steep gain for the pound, which was trading 0.60 percent higher against the greenback in the mid-afternoon in Asia, to $1.2843. The pound jumped following reports that UK Prime Minister Theresa May has struck a deal relating to financial services with Brussels, after months of struggling with the issue.

The dollar also declined slightly against the yen, trading down 0.11 percent to 112.81. IT was down 0.07 percent against the Canadian dollar.

More on our website...

EUR/USD:
groundstoneholdings-morning-newsletter-eurusd.png


APPLE:
groundstoneholdings-morning-newsletter-apple.png


SPX:
groundstoneholdings-morning-newsletter-spx.png


BITCOIN:
groundstoneholdings-morning-newsletter-bitcoin.png


USOIL:
groundstoneholdings-morning-newsletter-usoil.png


GOLD:
groundstoneholdings-morning-newsletter-gold.png
 

GroundStone Holdings

Active member
144 2
Morning Technical Newsletter

Morning Technical Newsletter

Pound Lifted by Agreement Promise

The Pound rallied against the US Dollar by more than 1% after one official from the British government said that they were very close to signing off on an agreement which would provide financial services companies in the UK basic access to the E.U. Marketplace. Concern over how the government could finance its deficit had been a major concern for financial market players and this news provided a solid lift for Sterling bulls. The financial services market plays a significant role in the economy in Britain.

As reported at 11:41 am (BST) in London, the*GBP/USD*was trading higher at $1.29, a gain of 0.84% and off the session peak of $1.2920; the low for the trading day was recorded at $1.2765. The*EUR/GBP*was trading at 0.88358 Pence, down 0.25%; the pair has ranged from a low of 0.88054 Pence to a high of 0.88635 Pence.

Strategist Calls for Caution

Market player's concern for the UK's current account deficit is because it is one of the highest among its peers at almost 4% of the country's GDP. Today's gains follow yesterday's support for the Pound after the Brexit minister said he believed a deal would be thrashed out by November 21. Though Dominic Raab offered up a specific date, the government did come back to state that no exact time frame for an agreement had been set. One currency strategist in London also expressed wariness, noting that the Parliament must ratify any agreement first and with that uncertainty it's too soon to celebrate.

More on our website...

EUR/USD:
groundstoneholdings-morning-newsletter-eurusd-1.png


APPLE:
groundstoneholdings-morning-newsletter-apple-1.png


SPX:
groundstoneholdings-morning-newsletter-spx-1.png


BITCOIN:
groundstoneholdings-morning-newsletter-bitcoin-1.png


USOIL:
groundstoneholdings-morning-newsletter-usoil-1.png


GOLD:
groundstoneholdings-morning-newsletter-gold-1.png
 

GroundStone Holdings

Active member
144 2
Education post 11/100 – How to trade downside channel pattern?

If we take this trend line theory one step further and draw a parallel line at the same angle of the uptrend or downtrend, we will have created a channel.

No, we’re not talking about ESPN, National Geographic Channel or Cartoon Network.

Still, this doesn’t mean that you should walk away like it’s a commercial break- channels can be just as exciting to watch as Game of Thrones or Keeping Up with the Kardashians!

Channels are just another tool in technical analysis which can be used to determine good places to buy or sell.

Both the tops and bottoms of channels represent potential areas of support or resistance.
How-to-trade-downside-forex-channel-pattern.png


To create an up (ascending) channel, simply draw a parallel line at the same angle as an uptrend line and then move that line to position where it touches the most recent peak. This should be done at the same time you create the trend line.

To create a down (descending) channel, simply draw a parallel line at the same angle as the downtrend line and then move that line to a position where it touches the most recent valley. This should be done at the same time you create the trend line.When prices hit the LOWER trend line, this may be used as a buying area.

When prices hit the UPPER trend line, this may be used as a selling area.

Types of channels
There are three types of channels:

Ascending channel (higher highs and higher lows)
Descending channel (lower highs and lower lows)
Horizontal channel (ranging)
Important things to remember about drawing trend lines:
When constructing a channel, both trend lines must be parallel to each other.

Generally, the bottom of channel is considered a buy zone while the top of channel is considered a sell zone.Like in drawing trend lines, DO NOT EVER force the price to the channels that you draw!

A channel boundary that is sloping at one angle while the corresponding channel boundary is sloping at another is not correct and could lead to bad trades.
 

GroundStone Holdings

Active member
144 2
How to trade hidden divergence?

Hidden Divergence

First at all let’s check how MACD hidden divergence looks:
Learn-How-to-trade-hidden-divergence.png


We covered regular divergences in the previous lesson, now let’s discuss what hidden divergences are.

Divergences not only signal a potential trend reversal; they can also be used as a possible sign for a trend continuation (price continues to move in its current direction).

Always remember, the trend is your friend, so whenever you can get a signal that the trend will continue, then good for you!

Hidden bullish divergence happens when price is making a higher low (HL), but the oscillator is showing a lower low (LL).

Hidden Bullish Divergence
This can be seen when the pair is in a UPTREND.

Once price makes a higher low (HL), look and see if the oscillator does the same.

If it doesn’t and makes a lower low (LL), then we’ve got some hidden divergence in our hands.

Hidden Bullish Divergence

Hidden Bearish Divergence
Lastly, we’ve got hidden bearish divergence.

This occurs when price makes a lower high (LH), but the oscillator is making a higher high (HH).

By now you’ve probably guessed that this occurs in a DOWNTREND.

When you see hidden bearish divergence, chances are that the pair will continue to shoot lower and continue the downtrend.

Hidden Bearish Divergence

Let’s recap what you’ve learned so far about hidden divergence.

If you’re a trend follower, then you should dedicate some time to spot some hidden divergence.

If you do happen to spot it, it can help you jump in the trend early.

Sounds good, yes?

Keep in mind that regular divergences are possible signals for trend reversals while hidden divergences signal trend continuation.

Regular divergences = signal possible trend reversal
Hidden divergences = signal possible trend continuation
 

GroundStone Holdings

Active member
144 2
Morning Technical Newsletter

Morning Technical Newsletter

News of Customs Arrangement Lifts Pound

The Pound Sterling moved higher against the US Dollar after a report in the UK Sunday Times said that the British government was close to striking a Brexit deal, which would include a customs arrangement for all UK borders. Given the March 29, 2019 deadline as the official date by which Britain leaves the European Union, investors were more than anxious that there was no advancements on the customs front over these past several months, which weighed heavily on the Pound which has suffered a loss of about 3.6% against the greenback. The latest news pushed Sterling to 10-day peak against the Dollar but it also strengthened against the Euro.

As reported at 11:32 am (GMT) in London, the GBP/USD was trading at $1.30, a gain of 0.26% and off the session peak of $1.3061; the low was recorded at $1.2970. The EUR/GBP was trading at 0.87416 Pence, down 0.41%; the pair has ranged from a low of 0.87340 Pence to a peak of 0.87740 Pence.

Optimism Should be Guarded

The Pound is also getting support from last week’s Bank of England policy meeting. The Monetary Policy Committee indicated that it would consider a more normalizing policy, in other words, moving toward a higher interest rate environment, provided that the UK government had a deal in place with the EU which ensured a smooth transition. Analysts point out that investor optimism should be guarded, however, given that the UK Parliament still needs to approve the proposals.

EUR/USD:
groundstoneholdings-morning-newsletter-eurusd-2.png


APPLE:
groundstoneholdings-morning-newsletter-apple-2.png


SPX:
groundstoneholdings-morning-newsletter-spx-2.png


BITCOIN:
groundstoneholdings-morning-newsletter-bitcoin-2.png


USOIL:
groundstoneholdings-morning-newsletter-usoil-2.png


GOLD:
groundstoneholdings-morning-newsletter-gold-2.png
 

GroundStone Holdings

Active member
144 2
Morning Technical Newsletter

Morning Technical Newsletter

All Eyes on Midterm Elections

The midterm elections that are slated to be held in the United States today will have dramatic ramifications on the country’s politics, as well as on the global markets. Four hundred and thirty-five seats in the House of Representatives will be available and thirty-five slots in the Senate will also be voted upon. The outcome will determine if President Trump’s Republican party will maintain a majority, which would make it easier for him to implement his proposed legislation (especially about healthcare, trade, taxes, and immigration issues), or whether the Democrats will take control of Congress, giving the president substantial opposition.

The markets have already reacted to pre-election predictions, with polls showing a strong turnout for democrats which will alter the current government makeup. U.S. stock markets endured a rocky October, but analysts expect a strong rebound if the Republicans manage to maintain control in the midterm elections. According to a report published by CNBC, the odds of the Republicans losing control of both the House and the Senate are just 10 percent. According to Reuters, the Democrats are expected to take control of the House while the Republicans are expected to maintain control of the Senate.

Asian shares were mixed on Tuesday, with the Nikkei 225 gaining 1.14 percent as of 4:03 p.m. HK/SIN and Hong Kong’s Hang Seng Index gaining 0.56 percent. Both the Shanghai Composite and the Shenzhen Composite were down, trading 0.23 percent and 0.49 percent lower respectively.

On the oil markets, U.S. WTI futures were down 0.33 percent to $62.89 per barrel and Brent crude futures were down 0.59 percent per barrel, sliding further away from the four-year highs hit in early October, despite the implementation of new sanctions against Iran that went into effect yesterday.

More on our website...

EUR/USD:
groundstoneholdings-morning-newsletter-eurusd-3.png


APPLE:
groundstoneholdings-morning-newsletter-apple-3.png


SPX:
groundstoneholdings-morning-newsletter-spx-3.png


BITCOIN:
groundstoneholdings-morning-newsletter-bitcoin-3.png


USOIL:
groundstoneholdings-morning-newsletter-usoil-3.png


GOLD:
groundstoneholdings-morning-newsletter-gold-3.png
 

GroundStone Holdings

Active member
144 2
Morning Technical Newsletter

Morning Technical Newsletter

Dollar Broadly Lower on Policy Outlook

The US Dollar was broadly lower after the US mid-term elections which suggested that FX players expect the Trump administration to face some strong headwinds attempting to push through some of its fiscal policies given the Democratic party’s control of the House of Representatives. Currency strategists say that the greenback had rallied under Trump’s fiscal stimulus plan and the economic data which accompanied it, and that that may have forced the hand of the Federal Reserve which signaled its willingness to move to a higher interest rate environment. Now, all bets are off, they say.

As reported at 11:15 am (GMT) in London, the EUR/USD was trading at $1.15, a gain of 0.62% and just off the session peak of $1.152. The USD/JPY was trading lower at 113.06 Yen, down 0.31%; the pair has ranged from 112.948 Yen to 113.818 Yen. The GBP/USD was trading at $1.3163, up 0.55%, off the session high of $1.3175.

Trump Efforts Could be Hampered

What is also worrying Dollar bulls is that, with control of the House, the Democrats now have the ability to scrutinize the administration’s current policies. Looking ahead, analysts say that there is greater uncertainty as to the Fed’s policies relative to higher rates, and the ability for the President to move ahead with certain stimulus policies.

EUR/USD:
groundstoneholdings-morning-newsletter-eurusd-4.png


APPLE:
groundstoneholdings-morning-newsletter-apple-4.png


SPX:
groundstoneholdings-morning-newsletter-spx-4.png


BITCOIN:
groundstoneholdings-morning-newsletter-bitcoin-4.png


USOIL:
groundstoneholdings-morning-newsletter-usoil-4.png


GOLD:
groundstoneholdings-morning-newsletter-gold-4.png
 

GroundStone Holdings

Active member
144 2
Morning Technical Newsletter

Morning Technical Newsletter

U.S. Oil Output Hits Record Highs


The United States assumed the position of the world’s top crude producer when its production hit 11.6 million barrels per day, which it did last week, according to a report released by the Energy Information Administration (EIA) yesterday. The report showed that the U.S. has increased its crude production by 22.2 percent this year alone, increasing production by 2 million barrels per day from the same period last year, and has tripled its production in the past decade. The U.S. government has set its target to produce 12.1 million barrels per day on average in the coming year. Russia is currently producing around 11.4 million barrels per day and Saudi Arabia is currently producing 10.7 million barrels per day.

OPEC members are expected to meet this weekend and it is largely expected that they will focus on how to react to America’s increasing production. Analysts have noted that there is a real possibility that OPEC will implement production cuts as it has in the past, to prevent prices from dropping further. Oil prices have tanked recently due to worries about a global supply glut and the increase in U.S. production. In addition to production increases in the U.S., Russia, Saudi Arabia, Iraq and Brazil have all increased production in recent years, contributing to oversupply.

On Thursday, oil prices were modestly higher, with U.S. WTI futures up 11 cents per barrel to $61.78 per barrel as of 2:37 p.m HK/SIN. Brent crude futures were up 0.07 percent to $72.12 per barrel.

More on our website...Link on profile

EUR/USD:
groundstoneholdings-morning-newsletter-eurusd-5.png


APPLE:
groundstoneholdings-morning-newsletter-aaple.png


SPX:
groundstoneholdings-morning-newsletter-spx-5.png


BITCOIN:
groundstoneholdings-morning-newsletter-bitcoin-5.png


USOIL:
groundstoneholdings-morning-newsletter-usoil-5.png


GOLD:
groundstoneholdings-morning-newsletter-gold-5.png
 

GroundStone Holdings

Active member
144 2
Morning Technical Newsletter

Morning Technical Newsletter

Hawkish Fed Lifts Dollar


The US Dollar earlier saw positive momentum against its rivals during Asian trade on Friday. That came on the heels of the the Federal Reserve Bank’s reaffirmation of its commitment to raise interest rates in the near term. Though the Fed did leave rates at their current levels, the language suggested that a rate hike could come as soon as next month. With the mid-term elections now out of the way and with an outcome largely predicted, analysts say that demand for safe haven currencies is likely to continue to fade.

As reported at 10:37 am (JST) in Tokyo, the EUR/USD was trading at $1.1356, down 0.08%; the pair has ranged from a low of $1.13537 to a high of $1.13690. The GBP/USD was trading lower at $1,3056, down 0.07% and just off the session low of $1.3052 while the high was recorded at $1.3070.

USD/JPY Helped by Policy Divergence

Against the Japanese Yen, the greenback has appreciated 2.4% within the last two weeks, largely a result of the monetary policy divergence between the Bank of Japan and the Federal Reserve. According to the BOJ, the economic situation in Japan does not yet warrant their reining in of the Quantitative Easing policy it began several years ago. Presently, Japan’s inflation rate remains stubbornly below the central bank’s 2% target while economic growth and productive have been relatively stagnant. The USD/JPY pair was trading lower at 113.884 Yen, down 0.135%.

More on our website, link on profile.

EUR/USD:
groundstoneholdings-morning-newsletter-eurusd-6.png


APPLE:
groundstoneholdings-morning-newsletter-apple-5.png


SPX:
groundstoneholdings-morning-newsletter-spx-6.png


BITCOIN:
groundstoneholdings-morning-newsletter-bitcoin-6.png


USOIL:
groundstoneholdings-morning-newsletter-usoil-6.png


GOLD:
groundstoneholdings-morning-newsletter-gold-6.png
 

GroundStone Holdings

Active member
144 2
Education post 13/100 – How to trade doji candlestick pattern?

– A Doji is a small bodied Japanese candlestick pattern whose opening and closing are at the same or nearly the same price.

– A Doji is usually part of common Japanese candlestick reversal patterns like the bullish Morning Star and bearish Evening star patterns

– Because Dojis are found in a large number of reversal patterns, traders automatically think that the single doji is a reversal candlestick. But in fact, the doji by itself represents indecision in the marketplace.



– A Doji breakout setup provides an excellent risk to reward opportunity for forex traders.

The lowly doji is very unassuming in appearance. Typically, it looks like a plus sign but can appear as a capital “T” in the Dragonfly doji pattern or the shape of a nail in the Gravestone Doji. We are going to be discussing the first two types of dojis found in the “cheat sheet” above. These small candles can lead to large breakouts that either continue trends or reverses them. We are going to look at the way to trade these power packed price patterns with limited risk for maximum potential gain

Typical candlesticks consist of a body that may be one of two colors; blue or red. A candle is blue if buyers were able to push prices above the opening price and were able to hold it until the close of the candle. A candle is red or bearish is sellers were able to push prices below the opening price and hold it there until the close.

On the other hand, the doji candles have no color. The doji and long-legged doji illustrate the battle between buyers and sellers that ended in a tie. The opening price and closing price are in the same place as bulls were unable to close prices higher and bears were unable to close prices lower.

How to Trade the Doji Breakout

Ideally, you want to find a doji that has formed near a level of support like a trend line. You want to identify the doji high and the doji low as this will determine the support and resistance levels of a potential breakout.

More on our website, link on profile.

how-to-trade-doji-candlestick-pattern.png
 

GroundStone Holdings

Active member
144 2
How to trade hammer candlestick formation?

How to trade hammer candlestick formation?

What Is a Hammer?

Considered a reversal formation and forms when price moves well below open, but then rallies to close near open if not higher. (inverted hammer is the mirror opposite)
Forms a candlestick with a long lower shadow (tail), and a small body with little or no wick–looks like a hammer, or mallet. (inverted hammer is the mirror opposite)
Depending on the previous trend, a hammer may be referred to as a hanging man or shooting start, but the same concept applies. Bullish or bearish bias depends on previous price swing, or trend.

A hammer after an uptrend is called a hanging man.
An inverted hammer after an uptrend is called a shooting star.

Why are Hammers important?

May act as a leading indicator suggesting a shift in bullish/bearish momentum
Completed hammers may help to either confirm, or negate, a potential significant high or low has occurred. –price drives higher or lower “hammering” out a top or bottom before closing back towards open
Significance increases with length of shadow (ideally 2-3 times the size of the body) as well as timeframe

Hammers may also help confirm, or strengthen, other reversal indicators (i.e. may occur as part of tweezer formation, or next to doji, etc.)
A hammer “fails” when new high is achieved immediately after completion (candle), and a hammer bottom “fails” if next candle achieves new low.
A hammer “fails” when new high is achieved immediately after completion (candle), and a hammer bottom “fails” if next candle achieves new low.

Example:

How-to-trade-forex-hammer-candlestick-formation.png
 
 
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock