In this video, we're going to take a look at the hammer and the hanging man patterns.
These candlesticks look the same.
Basically, they look like this or they can look like this with a small body, but the commonality is
short top with, longer bottom with.
Looks like a.
Mallott on a handle, so therefore it's called a hammer.
It's called a hanging man because they say that when that forms, it is a very grave sign.
So.
The difference between the two is where they're placed.
A hammer is at the bottom of a downtrend, a hanging man is at the top of an uptrend.
The.
Inner workings of what's going on is what's important.
You'll notice that the sellers gain a lot of strength during the day or the hour or whatever you're
trading, but then the buyers come in and support the market.
This shows that the sellers are running out of strength.
And this could be a bullish sign at the bottom of a downtrend, however, at the top of an uptrend,
there's a few special rules, so.
Let's take a look and I'll kind of show you what I'm thinking here.
This is a hammer, this is a downtrend.
And you can see that they tried to push lower but failed.
So when you break above the top of the hammer, think about all of the sellers during that hour.
You know, now the price has gotten above it.
Well, they're all losing money and they need to buy the market to flatten their position out.
So essentially, in this case and Litecoin, you're taking a look at where are all the traders position
and what are the wrong ones doing?
Well, the wrong ones are covering their buying.
So price went higher.
Notice how this one formed, but it didn't get broken above and therefore it wasn't a signal.
But also notice how the hammer here, they got broken above, ended up being retested and then we rallied
towards this area.
So that's classic behavior.
So this is the hammer in question for the light coin market, remember, this one had formed, but it
didn't get broken to the upside, so it never really kicked the signal off, so to speak.
So the first thing you look for ninety nine point ninety nine percent of the time is doesn't make sense
that this candlestick pattern has occurred where it has.
I'll move this down to the mid century mark.
Thirty six fifty and you can see that there was an explosive move to the upside there.
So obviously there are going to be a lot of orders there.
So that makes sense.
You can also see that there was a lot of volume here as well, but we could not break down.
So that makes sense that we might be running out of momentum.
Let's go ahead and put.
Lamarckian, Deon.
And you can see that at this hammer we had extremes and shortly thereafter we got the cross which kicked
off the trade.
You can also, in this particular instance, look at.
A set of estimates, for example.
And you can see that the.
Candlesticks had been spreading, right, but notice how there are the moving averages had been spreading,
but notice how we slammed right into this moving average.
Now, that could have been your initial target.
The reality is, though, and this is important to note about moving averages, support resistance matters
much more.
So as we pulled back there and then we formed this other hammer that shows you that the market is OK
with testing this.
So that would have given you a little bit more confidence going forward.
Again, this is a pretty pretty significant candlestick at pretty significant level.
And as I zoom out even further, you can see just how significant it was.
So in those cases, you have to be a little bit flexible on how you use these indicators.
But without a doubt, the support resistance, by far the biggest thing.
So here.
A hanging man is right here.
Now, those of you who are particularly astute may go, well, that looks like a dragonfly.
Well, they're really kind of the same thing.
There really isn't a huge difference.
It is traded the same way here in the sense that we're in an uptrend.
We pull back, we rally, and then we break down.
And that is the first sign of support breaking and we went much lower.
You can also make an argument for that being a hanging man.
After a quick bounce, we broke down below the bottom of it.
The buyers lost momentum again, stop loss.
Give us on the other side of the candlesticks pretty straightforward.
This is Hlinka, right, in an area that's caused some resistance in the past, you know, we pulled
back and then we ended up forming that hourly hanging man.
You can also take a look at.
The Makdisi, this looks like something that would have suggested that there's probably some momentum
problems here.
Yeah, you can see we crossed right there.
And then rolled over pretty straightforward, and if that didn't convince you that obviously the very
bearish candlestick that was next certainly should have at that point.
So in the next video, we're going to take a look at a pattern called three white soldiers and three
black crows.