How to use candlesticks?
A perfect hammer in Forex
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Discipleship-Training-Manuel-Uptown-Church
| A perfect hammer in Forex is the same as in any other market: its tail must be twice as large as the length of the body and the body has to be near or at the top of the candle. This means it can have a little upper shadow, but it has to be much smaller than the lower shadow. The smaller the body and the longer the tail, the more significant the interpretation of the hammer as a bullish signal. Another important criteria is the color of the body: the candlestick can be bullish or bearish, it doesn't matter.
Most patterns have some flexibility so much more illustrations would be required to show all the possible variations. This is what we attempt to do in the Practice Chapter. The illustration below is a sample question taken from the Practice Chapter's assessment. There you will find dozens of real case studies to interpret and answer. Each example will show a detailed explanation of the correct answer so that you can really integrate this knowledge in your trading. Remember: practice is one of the keys to success in Forex trading.
Answer: “A” is not a hammer because the lower shadow is not twice as large as the real body. Other criteria, such as the real body at the upper end of the trading range or the preceding downtrend, are fulfilled. “B” is a valid hammer because it emerges after a downtrend and the lower shadow is at least twice as large as the real body. Other criteria, such as the real body at the upper end of the trading range or the preceding downtrend, are fulfilled. It can have a little of an upper shadow. “C” is not a hammer because the preceding trend is up. A hammer always has to emerge after a downtrend. All the other criteria are fulfilled. Download 35.62 Kb. Share with your friends:
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