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Hammer Pattern Modified

The Hammer is a bullish reversal candlestick pattern that forms at the bottom of downtrends, characterized by a real body near the top, a long lower shadow, and little to no upper shadow. Confirmation requires the next candle to be green and close above the Hammer's close, along with a volume breakout above the 20 MA volume. Traders should target a risk/reward ratio of 1:1 and focus on 1-day and 1-hour candle time frames for buying opportunities.

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3 views6 pages

Hammer Pattern Modified

The Hammer is a bullish reversal candlestick pattern that forms at the bottom of downtrends, characterized by a real body near the top, a long lower shadow, and little to no upper shadow. Confirmation requires the next candle to be green and close above the Hammer's close, along with a volume breakout above the 20 MA volume. Traders should target a risk/reward ratio of 1:1 and focus on 1-day and 1-hour candle time frames for buying opportunities.

Uploaded by

sandeepkul88
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

HAMMER

Pattern Type: Bottom Reversal


Formation:
A. Real body near the top of the candle.
B. Hammer forms in downtrend only.
B. Colour of the body is not important, it can be green it can be red but green
shows you starting of a bullish trend.
C. Lower shadow should be 2-3 times of real body, max 3 times only. If
something going beyond the limits then avoid that pattern.
D. Very Little or no upper shadow.
E. The previous trend should be down (bearish).

Confirmation :
1. Next candle should be Green color and have to close above Hammer close.
always go with this confirmation. ( this is mandatory).
2. Focus on volume breakout of hammer candle only( above 20 MA volume)
this will give you confirmation on 50% of the basis. Take Volume confirmation
as the last step.

Conditions :
1. First, try to join the support line, and near about support you will get the
formation of the hammer.
The Hammer candlestick formation is viewed as a bullish reversal
candlestick pattern that mainly occurs at the bottom of downtrends.
The long lower shadow of the Hammer implies that the market tested
to find where support and demand was located. When the market
found the area of support, the lows of the day, bulls began to push
prices higher, near the opening price. Thus, the bearish advance
downward was rejected by the bulls. Also, there is a long lower
shadow, twice the length as the real body.

In the chart, the market began the day testing to find where demand
would enter the market. Stock price eventually found support at the
low of the day. In fact, there was so much support and subsequent
buying pressure, that prices were able to close the day even higher
than the open, a very bullish sign.
The Hammer is an extremely helpful candlestick pattern to help
traders visually see where support and demand is located. After a
downtrend, the Hammer can signal to traders that the downtrend
could be over and that short positions could potentially be covered.
Some Examples

Information By: CityInvest Divish S.


Website : ​[Link]
Facebook : ​[Link]/cityinvestmentservices
Telegram stocks: [Link]
Telegram FNO: [Link]
1.

2.
Avoid this Kind of Hammer

How to Take Trade


Target Time Frame:
The timeframe for a target in all candlesticks reversals Thumb rule: It will
achieve a target in next 4-8 candlesticks, maybe 12 also, but if something
going beyond 12 then focus on the chart again or You have to Exit the trade,
But first check the hart if there is no trend then better to exit. 80% of times
it will hit the target in 4-8 Candlesticks.

Risk/Reward Ratio:
First go with 1:1 ratio ( risk /reward)
If your stop loss is Rs 5 then your target will be Rs 5 only that means 1:1

First focus on 1 Day and 1 Hour candle time frame only.


Buying will be in last 10-15 minutes as per 1 Day candle
Buying will be in last 3-5 minutes as per 1 Hour Candle

Information By: CityInvest Divish S.


Website : ​[Link]
Facebook : ​[Link]/cityinvestmentservices
Telegram stocks: [Link]
Telegram FNO: [Link]

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