![]() As per per Encyclopaedia of Candlestick Charts: frequency rank is 36th out of 103. Frequency of Hammer candlestick patternįrequency of occurrence is medium to high. This generally takes 2 to 9 trading days (or timeframes you are looking at) as price has to cover the entire candle first. The price on following days will go down again and if it breaks down below the low of the hammer then one can take a trade on short side. It can also mean a small retracement or profit booking (this is experienced more than the actual reversal). This can take anywhere between 2 to 8 days (or timeframes you are looking at) This can only be confirmed if the price closes above the high of the hammer. Hammer candlestick after a prevalent downtrend can mean two things, it can mean a reversal into an uptrend. It can also occur after a gradual fall but chances of Hammer occurring after a sharp fall are more due to the nature of the market. Hammer candlestick in a downtrend generally occurs after a sharp fall. As you can see hammer appears thrice in such a short span of time, once indicating an end to the downtrend and on two occasions indicating and end of retracement in a prevalent uptrend. The below figure indicates a hammer in uptrend and in downtrend. Those that occur in a primary downtrend tend to have price rise for a few days but that’s it-price tumbles thereafter. A breakout candle closing above the high of the hammer can be a good entry point.Īs per Encyclopaedia of Candlestick Charts: The best-performing hammers are those that occur during a downward retracement of the primary (longer-term) upward trend. Hammer candlestick in uptrend generally occurs at the end of a retracement and it can be an important clue of a possible continuation of the original uptrend.ĭepending upon what happens immediately after the hammer, once can take a trade decision. Hammer Candlestick in Uptrend : These are the once to trade. In both the above cases, the battle on that day was won by bulls and hence this pattern is always considered as bullish independent of the colour of the candle.Ī green hammer candle, however, is slightly more bullish compared to a red hammer candle.
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