The hammer, the start and hanging man

The hammer, inverse hammer, shooting start and hanging man are all patterns involving a single and very similar candle at the end of a price trend.

The general look of the candle is a long single shadow and a small body (the candle looks like a hammer). Whether it occurs at the peak or bottom of a trend determines the name.

Figure 5.21: The hammer

In general, this candle reflects an anemic war. Basically, both teams fought hard during the time of this candle (as indicated by the length of one of the shadows). Unfortunately, the team to lose more is the one leading the prior trend. So commonly, this candle indicates a reverse in the price trend.

Again, what this type of candle indicates is an anemic attack by both teams at the end of a long war. They tried, which explains the large variation in price during the time of the candle, but at the end, the price closes at a very similar price that it opened; and the consequence is a reversal in price.

Figure 5.22: The hammer, the start and hanging man

The hammer

In the hammer pattern, the candle looks just like a hammer….a long shawdon and a smaller body.

It does not matter whether it is bull or bear candle, but it has to be at the end of a downward price trend.

What the candle tell you is that there was a massive attempt by the bears to bring down the price (Evidence by the low shadow of the candle), but when closing the price when still up. Basically, the attacks during that time were not enough for the bears to win the battle decisively.

The consequence of the anemic effort is for the longers to dominate and win. It is expected for the price to grow after a hammer candle.

Figure 5.23: The hammer

The Inverted hammer

The hammer can also also be inverted and have the same effect. The price will go up.

Figure 5.24: Inverted Hammer

Shooting start

This is the same shape of the hammer, but it occurs at the end of an upward price trend.

Note how the shadow of the candle points up, with which where the name Shooting Start comes.

This type of candle at the peak of a trend, predicts that the price will reverse and star to go down.

In other works, The actions by the leading team (the longers) are insufficient to keep up the trend. As it is expected, that is gains for the shorters.

Figure 5.25: Shooting Start

Here is an example

Figure 5.26: Shooting Start

And one more…

Figure 5.27: Shooting Start

The hanging man

When the shooting starts is reverse, that candle is called a hanging man.

The same deal here. After a long war by the longers, there were anemic responses by both teams at the peak of the trend. That is gain for the shorters.

Figure 5.28: Hanging man