in an early grade, (grade 1, i believe), under the title reversal patterns, this is on the page
"The hammer is a bullish reversal pattern that forms during a downtrend. It is named because the market is hammering out a bottom.
When price is falling, hammers signal that the bottom is near and price will start rising again. The long lower shadow indicates that sellers pushed prices lower, but buyers were able to overcome this selling pressure and [B]closed near the open[/B]. "
however the picture shows a white box which I think means it closes ABOVE the open. not to be picky, but just want to make sure I understand. should it read closed above the open, and not ‘near’ (which implies less than in this cas) the open.
If I am not mistaking, hammers can be bearish or bullish and I would think bullish is a better sign. for me I don’t get into are they hammers or hanging man or whatever. I see a long wick at the candle of a swing high or swing low and I feel that is significant and that is what I focus on. I see the wick as a battle between bulls and bears.
so if bears pushed price really low but then ran out of steam and the bulls started buying and it drove price up then it is a good sign of a reversal but like I said if bulls manage to push price higher than the open than I would think of this as a stronger reversal signal.
johnny, thanks for response, but it really did not answer my question. what I am saying is that the wording did not jive with the pic. the pic would show the close being higher than the open, and the wording implies the close being lower than the open.
if you look at it, you would see what I believe is a contradiction. just wanted to make sure of what we want here (or perhaps it does not matter) maybe the rally is all that matters and it does not matter whether the close exceeds the open.
do you see what I am asking?
can you enlighten?
appreciate it.
John
