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Hammer or Hangingman

 
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S2



Joined: 17 Oct 2005
Posts: 79
Location: Portland, OR

PostPosted: Mon Feb 13, 2006 3:02 pm    Post subject: Hammer or Hangingman Reply with quote

Deteming when it's a hammer or when it's a hangingman is one of the hardest aspects of pattern identification for me. So here is a good example to show case my dilema. Is the last candle a hammer or a hanging man, and why (or, how do you decide)?



S2
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New2Trading



Joined: 12 Oct 2005
Posts: 67

PostPosted: Mon Feb 13, 2006 3:42 pm    Post subject: Reply with quote

Thats more of a hanging man, due to it not being at the bottom of the trend.

The trend was on its way up, then the hanging man.
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cosmo



Joined: 06 Apr 2005
Posts: 57

PostPosted: Mon Feb 13, 2006 4:16 pm    Post subject: Reply with quote

.

Last edited by cosmo on Thu Feb 16, 2006 4:22 pm; edited 1 time in total
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Bluto



Joined: 26 Nov 2005
Posts: 146
Location: Va. Beach, VA

PostPosted: Mon Feb 13, 2006 11:00 pm    Post subject: Reply with quote

I'd agree with New2Trading. It appears after a brief upswing as a bearish indicator.
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Bookworm



Joined: 29 Dec 2005
Posts: 71
Location: Lubbock, TX

PostPosted: Tue Feb 14, 2006 9:10 am    Post subject: Reply with quote

S2,

OK, I have to add my opinion, too. Drum roll, please. . . . . Functionally, it is neither.

Stephen and Steve Nison both say that it is not the pattern itself only that counts, but its relative placement on the chart. Hammers must come after and at the bottom of a definable price decline. This one does not do that because it comes after a bounce. Hanging men come after a definable price rise. This one looks like it, but the rise is not substantial enough IMHO.

What you have is a bearish harami in the middle of a trading range, as the stochastics tell you. This is not an actionable signal unless you are already in the trade--in which case, you should move your stop up to the bottom of the previous day as insurance. I've seen them go both ways from here.

My advise is worth what you paid for it <8^o

Pace e bene,

Bookworm
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