TUTORIAL
Looking at the Monthly Candles. Price action in February and April formed a Hammer candle pattern. A Hammer is a reversal pattern. While these two candles are considered reversal candle patterns they are not strong reversal candle patterns as they did not Close above their Open. A Strong Hammer pattern would have closed above the Opening price level indicating the market was moving into new higher territory for the month.
TRADING
There is one problem we need to be careful about when it comes to Hammers that are not strong Hammers and that is their Low price is often retested. For this reason, it is advisable to wait for a confirming candle before making any trade decisions.
NOTE
These tutorials are not meant to be market analysis so they do not go into that detail. These tutorials are meant to simply teach what each candle is saying as they are formed each day during the market environment.
Looking at the Monthly Candles. Price action in February and April formed a Hammer candle pattern. A Hammer is a reversal pattern. While these two candles are considered reversal candle patterns they are not strong reversal candle patterns as they did not Close above their Open. A Strong Hammer pattern would have closed above the Opening price level indicating the market was moving into new higher territory for the month.
TRADING
There is one problem we need to be careful about when it comes to Hammers that are not strong Hammers and that is their Low price is often retested. For this reason, it is advisable to wait for a confirming candle before making any trade decisions.
NOTE
These tutorials are not meant to be market analysis so they do not go into that detail. These tutorials are meant to simply teach what each candle is saying as they are formed each day during the market environment.