When we want to know when the prices started to reverse direction? And how to identify the trend of alternation, hammer is an important factor in determining the reversal. In this article we will discuss the pillowcase and hammer pattern for forex trading. Let us learn.
Hammer is a reversal pattern up (bullish reversal) formed in a down trend. When prices are declining, showing hammer pattern is near the lower limit and the price will go up.
Terms – conditions for hammer pattern
Terms – conditions for hammer pattern is as follows:
- Occurs at the Bottom of Downtrend
- Color Candlestick showed an increase if the conditions are white
- Color Candlestick showed reduced if conditions are black
Condition
- Hammer should not have a Shadow over or not very visible
- Hammer must have Shadow under and the length of 2-3 times the length of shadow
- There must be confirmation weaken or strengthen
Shooting star pattern is the pattern reversal down (bearish reversal) that looks similar to the inverted hammer, it’s just that this pattern occurs when prices trend up. Shape pattern indicates that the price opened at a level close to the ‘low’ and began to harden for a few moments but stressed again that closed at a price close to the opening price level. This means that buyers continue to go further and push up prices but sellers will be able to cope with stress and urge prices back to the opening level. Here it appears that buyers started to lose momentum to sustain the trend soon sellers will take over control of the market to make a reverse trend.