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How is that a hammer if it's at the top of the trend? I understand that it would need bearish confirmation, and I'm not looking to short anything at all - sorry if I worded that wrong.
But I'm still confused how that's a hammer and not a hanging man. |
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I think it's a matter of semantics. Your screenshot says hammer, so I interrupted that as you think there is bullish price action. If that is a hammer, then we cannot short.
From
stockcharts.com, the hanging man says:
The Hanging Man is a bearish reversal pattern that can also mark a top or resistance level. Forming after an advance, a Hanging Man signals that selling pressure is starting to increase. The low of the long lower shadow confirms that sellers pushed prices lower during the session. Even though the bulls regained their footing and drove prices higher by the finish, the appearance of selling pressure raises the yellow flag. As with the Hammer, a Hanging Man requires bearish confirmation before action. Such confirmation can come as a gap down or long black candlestick on heavy volume.
Here's my interpretation, which is different than your standard candlestick definitions - I see a bullish hammer. Yes, by the book, a hammer at the top of a move is a 'hanging man' and while I 'get it', I don't like it.
What I mean is, a hammer is a hammer is a hammer to me. Now there's a big difference between a hammer that you ACT on and a hammer that you IGNORE. You simply cannot play any hammer you see for the sake of playing the hammer.
So, in your example here, I would consider a short on this 'hanging man' that resembles a bullish hammer as aggressive. Some sort of bearish confirmation would help any bearish sentiment and I would go so far as to say that I would want to see a bearish candle signal before considering a short here.
I apologize for the misunderstanding. I saw hammer and immediately thought there's no way to short a hammer, at least in any way that I've ever traded them.