Looking for a simple, no-hassle, and practical price reversal detection signal? Can! The way is easy, you just need to learn to understand the pattern of bullish hammer candle and practice the signal from the candle pattern accurately. As the name suggests, a bullish hammer candle can be easily recognized by its resemblance to a hammer shape. The bar body is formed from the closing price movement that does not move away from the opening price. The signal quality of this pattern is determined by the length of the shadow. Lower shadow should be at least twice the length of the body. While upper shadow sized much smaller than the body, or invisible at all. The shape and shadow of the pattern above indicate that the seller’s strength is weaker than the buyer. Seen clearly from the seller’s attempt to break the price down but it is close by the buyer not far from the opening price. You do not have to be afraid to trade anymore because our binary options strategy will give you protection with all the strategies we have so you always have a profit.
Note also the position. A bullish hammer candle will only be valid as a reversal signal when formed at the end of the downtrend. You can anticipate when a trend will end by using support and resistance lines (see also: 3 simple ways of determining support and resistance). Common mistakes usually occur when a beginner misappropriates the “hammer” signal when it is in the middle of the trend or at the top of the uptrend. The position of “hammer” when the uptrend is running is actually a signal of continuation of the bullish trend from pinbar. While the “hammer” at the top of the uptrend is a bearish reversal signal hanging man. After understanding the basic theory, from here we can practice direct trading strategy when bullish hammer candle signal pattern is formed. However, you should pay attention to the following factors; If you are a beginner, it is advisable to learn to read signals from the daily timeframe to avoid possible fake signals. If you are used to it, please use the timeframe underneath (not recommended at lower timeframe than H4).
As mentioned earlier, to anticipate when a trend will end you need to know where the price point of resistance and support is. This can be done manually or using indicators such as pivot points and Fibonacci retracement. The possibility of a surge in price beyond expectation could happen during a major impact news release (eg NFP, Retail Sales, etc.). As an anticipation, use tools such as a forex calendar that records what news has been scheduled and when it will be issued. When the bullish hammer pattern is formed near the support line. Use limit orders with price position between a body and low price. If you use an instant order, make sure the buy order only if the current price has been near the price earlier.