Hammer and Hanging Man v. Inverted Hammer and Shooting Star
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  1. #1
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    Default Hammer and Hanging Man v. Inverted Hammer and Shooting Star

    Trying to understand the difference between these two reversal patterns. Isn't the hammer and inverted hammer basically telling you the same thing. If you see these then the predictability of seeing an upward trend is greater? Same thing with the hanging man and shooting star? Any insight is appreciated.

  2. #2
    pipbull is offline Senior Member
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    Quote Originally Posted by newminc View Post
    Trying to understand the difference between these two reversal patterns. Isn't the hammer and inverted hammer basically telling you the same thing. If you see these then the predictability of seeing an upward trend is greater? Same thing with the hanging man and shooting star? Any insight is appreciated.

    In my experience with candlesticks, i find they must be used in the proper context. Although they can be applied to most time frames, i find their reliability increases on the higher time frames. Secondly, i find they are far more effective when the signals appear at or near significant support and resistance levels.

    Hammer and inverted hammer are essentially the same thing. The main difference is if you see one of these signals after a strong move up, then it is a hammer. After a strong move down, it is an inverted hammer (the reasoning may be the exact opposite, i'm not 100% sure. You might confirm that elsewhere)

    Finally, keep in mind that these patterns are more telling after a strong move. In other words, if you see a hammer formation occur after a slow and gradual move up, then it is generally best to disregard it (unless near resistance)

    Hope this helps

  3. #3
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    Talking Hammer and inverted hammer

    A hammer at the end of a strong downtrend on or near a support line signals a probable beginning of an uptrend while an inverted hammer at the end of a strong uptrend on or near a resistance line signals a probable beginning of a downtrend. If you see a hammer in an uptrend it shows that the trend will most likely continue upwards on the other hand if you see an inverted hammer in an downtrend it shows that the trend will most likely continue downwards. The higher the time frame this signals becomes more reliable.

    I hoped this will help clarify issues for you.

    tsglory.

  4. #4
    purplepatchforex's Avatar
    purplepatchforex is offline FX-Men Honorary Member
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    It's just price action representation - if it looks like it's going down, then it's going down and vice versa.
    Keep It Simple Stupid

  5. #5
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    gasanvill is offline Master Contributor and Member
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    In my experience candelestick patterns work better in 4H and daily charts. But they must not be used alone, you have to combine them with any other tool because they are not a confirmation tool.
    There is only one side to the market; and it is not the
    bull side or the bear side, but the right side.

  6. #6
    Viper5 is offline Senior Member
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    The idea is that bear/bulls tried to push price but were unsuccessful and so it leaves a giant wick to show that.

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