Candlesticks - Vol 8 - Inverted Hammer

[VegassTrades]

really good example is in November on the $SPY

[WhisperingToTheWind]

awesome videos, very helpful!!! thanks a lot!!!!!!

[graduatefast]

Hi, quick questions for you. I understand that we should contextualise these reversals to market sentiment, and applicable to a change in trend .

In your first e.g, can the 2 inverted hammers be analysed such that they further contribute to a downard trend? (As the higher prices are still being rejected, although there may be some buyers willing to pay a higher price).

I'm assuming the inverted hammers can not be interpreted as shooting stars as they're already in a bearish market?

Thnx

[YourTradingCoach]

Hi graduatefast,

Until confirmation through price trading above the pattern, then they're just 'potential' inverted hammers, and price may continue the downtrend. Of course, even after confirmation the pattern may fail (they're not 100%). A failed pattern can then lead to a great continuation trade as all the candlestick reversal pattern traders have their stops hit, adding to bearish orderflow.

Cheers,

Lance.

[mediacenter7829]

Thank you for the excellent training videos.

Question, i have a chart that was in an long uptrend and then a bearish reversal took place, will that one day large bear candle and then the next day an inverted hammer signal a bullish reversal pattern or will the inverted hammer be considered a shooting star

[YourTradingCoach]

Hi mediacenter,

Impossible to say from the short description. In analysing a chart you need to consider the formation within the context of the market. It could well be bearish, if for example it occurred at the top of an incredibly overextended euphoric bull move. It could be considered bullish if the single bearish candle took price right down into an area of support. It's important to not look just at the patterns - consider the context of where they occur in the market.

Cheers,

Lance