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trend reversal tool
hammer- candle having lower tail should be 2 times of its body size. hammer green cooler ,volume high (bullish trend )
hanging man -bearish trend
Hammer/hanging man indicates a trend reversal. Sign of strength and negative aspects.
After a significant trend the above pattern appears, it shows trend reversal if volume is high on that day.
Indicates strong buying/selling zone.
Trade duration – 3-4 days.Hammer – Buy at hammer high, stop loss – hammer low . Target – 1.5 times the risk taken
Hanging man – short at hammer low, stop loss- hammer high. same target.Hammer:
Hammer is sign of strength.Valid hammer should be appear only after a significant price fall.
Lower tail should be min 2 times of the body size with no upper tail.Body should be green and high volume should be excepted.
Buy:When next day crosses Highest of previous day(Hammer)(A).
Stop Loss:Lowest of the Hammer(Risk)
Target:A+[2*Risk]
Hanging Man:
Hanging Man is strength of weakness.Valid Hanging Man should be appear after significant price up move.
Lower tail should be min 2 times of the body size with no upper tail.Body should be Red and high volume should be excepted.
Sell:Sell when it crosses the previous day low of the Hanging Man(A).
Stop Loss:Highest of the Hanging Man(Risk).
Exit:A+[2*Risk]
hammer: trend reversal
significant price fall
green color
high volume
lower tail length equal to two times length of hammer
upper tail to be invisible
BUY: If it is highest of the previous day and valid for 3 or 4 days
It is bullish
Hanging man: Hammer color to be red
It is bearish
it is reversal
upper tail to be double time length of hammer
lower tail to be invisible
significant price rise
high volume
Sell: if it is lowest of the previous day
Hammer/ Hanging man is a trend reversal pattern.
Since this is a very powerful pattern and the returns are more than the risk (usually 1:2), this is very popular.
Buy – When the price goes above the hammer’s high or hangman’s low or stop loss
Sell – When the price goes below the hammer’s low or hangman’s high or stop loss
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