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Its a formation during the reversal with the lower wick two times bigger than the body for the hammer and upper wick two times bigger than the body for hanging man.
This is popular because of its strength. The price goes far low and try to come up and sustains. This is a rare occurrence but powerful.Buy :- top of the hammer
stop loss :- bottom of the hammer
Sell :- buy + (buy-stoploss)Hammer pattern is equivalent to opening stock and closing stock and upper tail will not be visible and it is a bullish we can buy when the price breakthrough the upper tail
Hanging pattern is similar to hammer but the lower tail should not be visible and the upper tail covers more than a body when the price goes through lower tail we can create a short position.
hammer – sign of strength
Hammer appear after a significant price fall to effect a trend reversal
The hammer formation is created when the open, high and close are the same pricehanging man – sign of negativity
Start of bearish trendHammer:
It is a reversal trend with the recent price fall. Hammer lower tail should be two times of its body size and the upper tail should be invisible.
Green in colour with a high volume indicates bullish movement.
Buy when the price exceeds the days high and stop loss below the days low.
Hanging man:
It is a reversal trend with the recent increase in price. Hanging man upper tail should be two times of its body size and the lower tail should be invisible.
Red in colour with a high volume indicates bearish movement.
Sell when the price goes below the days low and stop loss above the days high.
hammer – sign of strength, these are very reliable, powerful and appear rarely it should appear after a significant price fall, lower tail should 2 times of the body and no upper tail. body should be green in colour buy above the highest point of the hammer day. profit a+2 times of risk taken
hanging man – sign of negativity body should be red in colour upper tail should be 2 times of the real body. lower tail should be nil. sell when the price goes below the days low.
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