Reversal Pattern Hammer – Friends, although many patterns are performed in the market. But today, we are going to talk about a lovely way. After which reversal is inevitable in the market. Friends, these patterns are performed a lot in the market.
But they have many conditions. A trader can easily trade on that pattern if he understands these conditions. If you want to understand this through video, visit our YouTube channel.
Candlestick Reversal Chart Pattern Hammer –
Friends, this reversal pattern forms support and bottom in the market. And its primary function is to eliminate the Trend of the market. To eradicate the bearish Trend which was running from behind. This pattern will be performed when the market has made its bottom and will start preparing to go upside.
In this candlestick pattern, the market is continuously forming big red candles. It shows the Trend is precisely toward the downside. And here, Seller is putting all its efforts into slowing down the market. And he even manages to take it down.
But there is a support area. And from there, the buyer pulls the market by full force. And Performing a candlestick pattern in the market name is a hammer, immediately after the hammer. The market is performing green candles above the hammer. And given the close after that, we are sure the downtrend is over in the market. Now the market will go upwards.
- Hammer candlestick is a bullish reversal candlestick pattern. It occurs at the bottom of a downtrend in the market.
- Hammer signals that the bears have lost control over the market’s movement. Indicating a potential reversal to an uptrend.
- Confirmation occurs when the next candle gives close above the hammer.
- Hammer doesn’t provide a price target. We can not determine what our profit is easy.
How Trade the Hammer –
Friends, now let’s talk about how we will trade it. Guys, we need a continued downtrend before changing this. And this pattern should be performed precisely at the bottom. And we also need a candle that gives close above the hammer immediately.
After all, this is happening. We have to enter in trade on the last candle high who has given the close above the hammer. And we have to place our stop loss below the hammer Candle low with a little buffering. After that, we have to sit quietly till our stop loss or target hits. We don’t have to close our positions out of fear.
At the same time, we also have to see how the movement in the market. If the inside market momentum is not good, we must ignore the trade as much as possible. Because without a volatile market, we cannot trade well.
- The Need Good Downtrend in the market
- There should be momentum within the market
- This pattern should be performed on the bottom
- Its body should be small, and the tail should be long
- The body of This candlestick should be at least two times than its shadow
- And this chart pattern shadow must be at most four times as large
- This is the basic chart pattern of the stock market
Hammer Is Bullish Candlestick Pattern?
Friends, now the question arises is hammer a bullish stick’s pattern? The answer is yes; it is a bullish candlestick pattern. And why is it because a good bull rally in the market comes after the formation of this pattern?
Because this pattern is usually formed at the very bottom, where the ability of the Seller to take the market further down is over, and after that, the market starts going up. That’s why we call this pattern a Bullish pattern.