Trade Stock Indices

Reversal Candle Patterns in Indices - Examining the Hammer Candlestick Pattern

Reversal Candlestick Patterns for Indices: Bullish and Bearish Candles Tutorial and Guide

Reversal candles patterns occur after an extended prior market trend. Hence, for a candles pattern setup to qualify as a reversal candles setup there must be a prior market trend.

These reversal candle-sticks patterns are:

  1. Hammer Stock Index Candles Pattern and Hanging Man Stock Indices Candle Pattern
  2. Inverted Hammer Stock Index Candles Pattern and Shooting Star Stock Indices Candle Pattern
  3. Piercing Line Indices Candle Pattern and Dark Cloud Indices Candle Pattern
  4. Morning Star Candlesticks and Evening Star Candles
  5. Engulfing Indices Candles Patterns

Hammer and Hanging Man Patterns in Stock Indices

Hammer and hanging man candles look the same. But hammer signals a bullish reversal. Hanging man points to a bearish turn.

Hammer Bullish Candle on Indexes - Hammer Reversal Patterns for Stocks

Analysis of the Hammer and Hanging Man Candlestick Patterns in Stock Indices Trading

Hammer Stock Indices Candle Patterns

Hammer Candlesticks Pattern is a potentially bullish candle pattern setup which forms during a downward indices trend. It's named and called so because the market is hammering out a bottom.

A hammer candle pattern has:

  • A small body
  • The body is at the top
  • The lower shadow is 2 or 3 times the length of real body.
  • Has no upper shadow or has a very small upper shadow if present.
  • The color of the body isn't important

How to Trade Hammer Candlestick Patterns? - Hammer Bullish Candle Setups in Stocks

Hammer Candle-sticks

Technical Analysis of Hammer Candlesticks Pattern

The buy signal is confirmed when a candlestick ends above the starting price of the candle on the left side of the hammer candlesticks pattern.

Stop Loss orders should be positioned just a few pips beneath the lowest point established by the hammer candlestick pattern.

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