As of 11/20/2024
Indus: 43,408 +139.53 +0.3%
Trans: 17,002 -26.31 -0.2%
Utils: 1,055 +1.25 +0.1%
Nasdaq: 18,966 -21.33 -0.1%
S&P 500: 5,917 +0.13 +0.0%
|
YTD
+15.2%
+6.9%
+19.7%
+26.3%
+24.1%
|
 46,000 or 43,000 by 12/01/202418,000 or 16,600 by 12/01/20241,075 or 1,000 by 12/01/202420,000 or 18,400 by 12/01/20246,100 or 5,800 by 12/01/2024 |
As of 11/20/2024
Indus: 43,408 +139.53 +0.3%
Trans: 17,002 -26.31 -0.2%
Utils: 1,055 +1.25 +0.1%
Nasdaq: 18,966 -21.33 -0.1%
S&P 500: 5,917 +0.13 +0.0%
|
YTD
+15.2%
+6.9%
+19.7%
+26.3%
+24.1%
| |
|
46,000 or 43,000 by 12/01/202418,000 or 16,600 by 12/01/20241,075 or 1,000 by 12/01/202420,000 or 18,400 by 12/01/20246,100 or 5,800 by 12/01/2024 | ||
My book,
Encyclopedia of Candlestick Charts
If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.
$ $ $
Years ago when I started learning about candlesticks, I already knew about the hammer, but the inverted hammer escaped my attention. I thought it was a hammer upside down, but it's not. A hammer is a single candle line in a downtrend, but an inverted hammer is a two line candle, also in a downtrend. The inverted hammer is supposed to be a bullish reversal candlestick, but it really acts as a bearish continuation 65% of the time. The overall performance ranks it 6 out of 103 candles, meaning the trend after the candle often results in a good sized move.
|
Theoretical performance: Bullish reversal
Tested performance: Bearish continuation 65% of the time
Frequency rank: 61
Overall performance rank: 6
Best percentage meeting price target: 68% (bull market, up breakout)
Best average move in 10 days: 7.74% (bear market, up breakout)
Best 10-day performance rank: 9 (bear market, up breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts. The above numbers are based on hundreds of perfect trades. See the glossary for definitions. |
 Inverted Hammer
|
The inverted hammer is a two line candle, the first one is tall and black followed by a short candle line of any color. The inverted hammer is supposed to act as a bullish reversal and that makes sense from the picture. It looks as if downward momentum is slowing. However, for an upward breakout to occur (confirming a reversal of the existing price trend), price has to close above the top of the candle pattern, and that is more rare than a downward breakout. Thus, this candle acts as a bearish continuation because price frequently continues lower.
The overall performance rank is 6 out of 103 candle types, where 1 is the best performing. The best average move in 10 days is a huge rise of 7.75%. I consider moves above 6% as good ones, so this is exceptional. The pattern does best in a bear market after an upward breakout, ranking 9th for performance.
| Characteristic | Discussion |
| Number of candle lines | Two. |
| Price trend leading to the pattern | Downward. |
| Configuration | Look for a tall black candle with a close near the day's low followed by a short candle with a tall upper shadow and little or no lower shadow. The second candle cannot be a doji (opening and closing prices cannot be within pennies of each other) and the open on the second candle must be below the prior candle's close. |
If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.
The chart shows an inverted hammer (the two candles circled in red) on the daily scale. The inverted hammer is a two-line candle pattern with the first candle line being a tall black one with a short lower shadow (a close near the low) followed by a shorter second candle. The second candle cannot be a doji, meaning the opening and closing prices must be far enough away to show a body color. Plus, the second candle must have an opening price below the prior day's close.
That configuration is what you see here.
Whenever I think of a continuation candle, I often wonder why did they bother to name it? The answer is obvious because it says price is unlikely to reverse and that is worth knowing. Of course, knowing that theory is wrong about this candle can pay you big dividends, too, when shorting a stock with an inverted hammer. As in this case, price continues lower. If you had believed that an inverted hammer was a reversal and closed out your short position, you would have missed a major move down.
-- Thomas Bulkowski
Support this site! Clicking any of the books (below) takes you to
Amazon.com If you buy ANYTHING while there, they pay for the referral.
Legal notice for paid links: "As an Amazon Associate I earn from qualifying purchases."
|
My Stock Market Books
|
My Novels
|
Whatever kind of look you were going for, you missed.
on 