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The Hammer |Hanging man | shooting star| Single Candlestick patterns (Part 3) — Transcript

by Nicholas Trading Strategy · 2,007 words · 347 segments · language en · Watch on YouTube

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0:00welcome to today's Financial
0:03Insights in this segment we will explore
0:06the fascinating world of Candlestick
0:08patterns focusing on the unique paper
0:11umbrella pattern that Traders use to
0:13make informed decisions in the
0:16market the paper umbrella is a powerful
0:19single Candlestick pattern that aids
0:21traders in identifying potential Market
0:24directions its interpretation varies
0:27depending on its placement within the
0:29price chart
0:31this pattern comprises two essential
0:33Trend reversal
0:36formations the bearish are hanging man
0:38and the relatively bullish a hammer a
0:42distinguishing feature of the paper
0:43umbrella is its long lower Shadow paired
0:46with a small upper
0:48body now let's delve into the specifics
0:51of when and where this pattern
0:54appears if the paper umbrella emerges at
0:57the bottom of a downward rally it takes
0:59on the name
1:00Hammer conversely if it appears at the
1:03top of an uptrend rally it is referred
1:06to as the hanging
1:07man to qualify as a paper umbrella the
1:11length of the lower Shadow must be at
1:13least twice the size of the real body a
1:16crucial aspect known as The Shadow to
1:18real body
1:20ratio let's illustrate this with an
1:22example open at 100 High at 103 low at
1:2794 and close at 10 two representing a
1:31bullish
1:32candle the real body's length is
1:35calculated as close minus open which is
1:38two meanwhile the lower Shadows length
1:42is open minus low resulting in
1:45six as the lower Shadow is more than
1:48twice the size of the real body we can
1:50confidently identify the formation of a
1:53paper
1:54umbrella in conclusion the paper
1:57umbrella pattern offers Traders a
1:59valuable tool for recognizing potential
2:01market
2:02trends the bullish Hammer is a
2:04Candlestick pattern that's important
2:06when the market is at the bottom of a
2:09trend it looks like a small body at the
2:12top of the trading range with a long
2:14Shadow at the
2:15bottom the longer this Shadow the more
2:18bullish the
2:20pattern in this chart you can see two
2:23hammers at the bottom of a
2:25downtrend look closely the blue Hammer
2:28has a tiny upper sh Shadow and that's
2:31okay according to the be flexible
2:33quantify and verify
2:35rule a hammer can be any color but it's
2:38a bit more reassuring to see a blue
2:40colored
2:41body the hammer should follow a
2:43downtrend as shown by the curved line in
2:46the
2:47chart here's the thinking behind a
2:50hammer the market is in a downtrend
2:53controlled by
2:55bears during a downtrend each day the
2:58Market opens low lower than the previous
3:00day and closes even
3:03lower on the day the hammer pattern
3:05forms the market trades lower reaching a
3:08new
3:09low but at this low Point some buying
3:12interest shows up pushing prices
3:15higher the stock closes near the high
3:18point of the
3:20day this suggests that Bulls tried to
3:22stop the prices from falling more and
3:25they somewhat
3:27succeeded this action by the Bulls could
3:29change the sentiment so it's time to
3:31consider
3:33buying here's how to set up the trade
3:35for a
3:36hammer a hammer pattern suggests a long
3:40trade when to enter depends on how much
3:43risk you're willing to
3:45take Risk Takers can buy the stock on
3:48the same day regardless of the Hammer's
3:51color if you're more careful buy the
3:54stock the day after the pattern but make
3:56sure it's a blue candle
3:58day Risk Takers check the conditions at
4:013:20 p.m. on the hammer
4:04day open and close should be almost the
4:08same the lower Shadow should be at least
4:10twice the length of the real
4:13body if these conditions are met the
4:15pattern is a hammer and Risk Takers can
4:18go
4:19long risk averse Traders check the ohlc
4:23data on the second
4:24day if it's a blue candle the trade is
4:28good for going long
4:30the low of the hammer is your stop- loss
4:32for the
4:34trade this chart displays the formation
4:36of a hammer in a 15minute intraday chart
4:39of sipler limited both risk-taker and
4:42risk averse Traders could have
4:44established profitable
4:46trades let's break down the trade
4:49setup by price for a risk taker the risk
4:53taker enters the trade on the hammer
4:55candle itself at
4:58444 by price price for a risk averse the
5:01risk averse Trader joins the trade on
5:03the next candle after confirming it is
5:06blue at
5:0944.4 stop loss for both Traders the stop
5:12loss for both Traders is set at 4
5:16141.5 which is the low of the hammer
5:20formation notice how the trade unfolds
5:23resulting in a favorable intraday profit
5:26in this example chart the risk averse
5:28Trader would have gained an advantage by
5:31adhering to the by strength and cell
5:33weakness rule in this chart we see two
5:36instances of a hammer
5:38formation both hammers met the
5:42criteria the preceding Trend should be a
5:46downtrend the shadow toore body ratio
5:48must
5:50align the cautious Trader following rule
5:53one of candlesticks would have avoided a
5:55potential loss on the first
5:58Hammer however both risk averse and
6:00risk-taking Traders might have been
6:02tempted to enter a trade after the
6:04second
6:05Hammer unfortunately the stock didn't
6:08rise significantly and eventually went
6:11down remember once you enter a trade
6:15stick to it until either the stop loss
6:17or Target is
6:19hit don't make changes to the trade
6:21until one of these events
6:24occurs while losses are inevitable in
6:26some trades it's crucial to note that
6:29this is a calculated risk not a
6:31speculative one in this chart there's a
6:34Candlestick pattern that looks like a
6:36perfect
6:38Hammer however it doesn't meet the
6:40required condition of having a prior
6:43downtrend as a result it doesn't qualify
6:47as a defined
6:48pattern remember adherence to specific
6:52criteria is crucial when identifying and
6:54trading based on Candlestick patterns
6:57the hanging man
7:00this pattern signals a potential
7:01reversal at the top of an uptrend
7:04suggesting a shift from bullish to
7:05bearish
7:07sentiment the hanging man consists of a
7:10small real body at the upper end of the
7:12trading range with a long lower
7:15Shadow this Candlestick can be of any
7:17color and what matters is the ratio of
7:20the Shadow to the real
7:22body the prior trend for the hanging man
7:24should be an uptrend as illustrated by
7:27the curved line in the chart
7:30here's the thought process behind the
7:32hanging
7:33man the market is in a strong uptrend
7:36dominated by the
7:38Bulls new highs and higher lows
7:41characterize the market during the
7:44uptrend the day the hanging man pattern
7:47appears the Bears make an entry evident
7:49by the long lower
7:51Shadow Bears attempt to break the
7:54stronghold of the
7:55Bulls now let's look at the trade setup
8:00for the risk taker a short trade can be
8:02initiated on the same day around the
8:05closing
8:06price for the risk averse a short trade
8:09can be initiated at the close of the
8:11next day after confirming the appearance
8:13of a red
8:15candle validation for both risk-taker
8:18and risk averse follows the same method
8:20as explained in the hammer
8:22pattern once the short trade is
8:25initiated the high of the candle acts as
8:27a stoploss for risk management
8:30ment in this scenario we're looking at a
8:33hanging man formation in the chart of
8:36bpcl limited at a price of
8:40593 let's delve into the ohlc details
8:44open at
8:46592 High reaching
8:5459375772
8:57now let's break down the trade
9:00setup the risk taker decides to initiate
9:03a short trade on the same day the
9:05hanging man pattern appears entering at
9:10593 on the other hand the risk averse
9:13Trader opts for a more cautious
9:16approach they initiate the short trade
9:18on the next day at closing prices
9:21ensuring it is a red candle
9:23day both risk taker and risk averse
9:26Traders follow their strategies and
9:28initi iate their trades
9:31accordingly to manage potential losses
9:34the stoploss price for this trade is set
9:36at the high price just above
9:59ific an but personally my preference
10:01leans a bit more towards the
10:04hammer given identical circumstances
10:07with two trading opportunities one
10:09featuring a hammer and the other a
10:11hanging man I would opt to invest my
10:14Fund in the
10:15hammer this inclination is rooted in my
10:18trading experience with both
10:21patterns the hanging man does give a
10:23pause for
10:25thought if bears were indeed exerting
10:27influence during the today why did the
10:30price rebound after reaching a
10:33low this observation tends to reaffirm
10:36the dominance of bulls in the
10:38market in your own exploration of the
10:41markets I encourage you to formulate
10:43your own theories based on
10:46observations this approach will not only
10:49enhance your ability to fine-tune trades
10:52but also contribute to the development
10:54of a well-structured market
10:56perspective the shooting star our last
10:59single Candlestick pattern before
11:01delving into multiple Candlestick
11:03patterns holds significant trading
11:06potential due to its powerful price
11:08action visualized as an inverted paper
11:11umbrella the Shooting Star deviates by
11:14lacking a long lower Shadow but
11:16compensates with a long upper Shadow at
11:19least twice the length of the real
11:21body while the body's color is
11:24inconsequential a red real body enhances
11:27the pattern's reliability
11:30a more extended upper Wick intensifies
11:32the bearish nature of the
11:34pattern though the textbook definition
11:37excludes a lower Shadow a small presence
11:40as seen in the chart is considered
11:44acceptable being a bearish pattern the
11:46shooting star requires a prior bullish
11:49Trend here's the thought process behind
11:52the shooting
11:54star the market is in an uptrend
11:56indicating bullish control result
11:58resulting in new highs and higher
12:01lows on the day the shooting star
12:04emerges the market trades higher
12:07establishing a new
12:09high however selling pressure ensues at
12:12the day's High leading the stock to
12:14close near the low Point forming a
12:16shooting
12:18star the entrance of selling pressure
12:20implies successful bare intervention
12:23poised to continue in the upcoming
12:25sessions signaling potential shorting
12:28opportunities for Traders let's analyze
12:30this chart featuring a shooting star
12:33positioned at the Pinnacle of an
12:35uptrend looking at the ohlc data open
12:39equals
12:411,426 High equals
12:451,453 low equals
12:481,410 close equals
12:521,417 let's explore the short trade
12:56setup for the risk taker the trade is is
12:59initiated at 1417 on the same day the
13:02shooting star
13:04forms to confirm the shooting star
13:06formation the risk taker checks two
13:10conditions ensure the current market
13:12price aligned closely with the low
13:15price verify that the length of the
13:18upper Shadow is at least twice the
13:20length of the real
13:21body for the risk averse the trade is
13:24initiated on the next day confirming the
13:27formation of a red candle
13:30once the trade is live set the stop loss
13:32at the pattern's high in this case at
13:371453 as discussed previously after
13:40setting up a trade it's crucial to
13:43exercise patience waiting for either the
13:45stop loss or Target to
13:48trigger avoid making impulsive decisions
13:51except perhaps for adjusting your stop
13:54loss we'll delve into trailing stop-loss
13:57in our future disc discussions here is a
14:00chart where both the risk taker and the
14:02risk averse would have made a remarkable
14:05profit on a trade based on a shooting
14:07star let's delve into an example where
14:10both the risk averse and risk-taker
14:12Traders might have initiated a trade
14:14based on a shooting
14:17star however it's essential to note that
14:19the stop loss in this case has been
14:22breached a crucial aspect to remember is
14:25that when the stoploss triggers the
14:27trader must EX the trade as the initial
14:30trade setup no longer holds
14:33validity in many instances exiting the
14:36trade when the stoploss is triggered
14:38proves to be the wisest
14:41decision keep in mind these Dynamics as
14:44we navigate through various scenarios in
14:46our exploration of trading
14:49strategies stay tuned for more insights
14:52and practical approaches to enhance your
14:54trading
14:55skills thank you for watching this video
14:59if you have any questions or doubts
15:01about trading feel free to reach out to
15:04us on WhatsApp at this number don't
15:06forget to subscribe to our channel for
15:08more insightful content we'll be back
15:11soon with another trading strategy video
15:14Until then take care and happy Trading

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