Hammer - Reversal Signal for Downtrend Condition

Have you ever handled a hammer?

If not then this is a simple tool used by the carpenters to put nails into the wooden surface. Anyway, the relationship with the Candlestick Pattern which is also known as "Hammer" is their appearance. As for those who are completely clueless of how does a hammer looks like then I suggest searching for its images on Google Search Engine.

This type of Candlestick Pattern can only be found on a downtrend condition of the market. Hammer can be easily identified by it's small sized body with a long wick or shadow which is twice or longer than its real body. As for the color, it can either be bullish or bearish.

Take note that when you are able to encounter this type of candlestick especially on a downtrend situation, it is advisable not to make any rush decision since it requires more additional candles for confirmation. What we need is a "Close above the Close". This means that we need an additional two succeeding candles and they must close above each other closing prices.

You might experience in some certain situation that the trend reverses at an early stage without patiently waiting for the two confirmation candles. There is an explanation about such occurrences where you need to zoom at a closer time-frame. If you have already acquired some knowledge and experience then you will most likely be able to determine the exact period to setup your orders.

Trading alone simply with the use of a candlestick can be very plain and simple but it's too complicated especially for the beginners. To provide more probability on guiding your decisions, it is suggested that you make use of other tools as your secondary method for confirmation.

Different Types of Spinning Tops

Spinning Tops is a type of candlestick indicating a positive reversal signal. This means that the market will have a sudden movement that will change in direction. Most likely, Spinning Tops consists of a small body and a long upper and lower shadows. Take note that the upper and lower shadows should always be longer than the body. Additional discussion about this type of candle stick is posted on this article entitled Spinning Top Reversal.

So what are the different types of the Spinning Tops?

Doji Candlesticks

This form of candlestick consist of a body with almost the same opening and closing price. They are commonly encountered consisting of long-legged shadows and a small body at the middle part. Traders can make use of them before making any necessary actions on their trades.

Cross Doji

This type of candlestick forms an exact image of the holy cross. It consists of a body with equal opening and closing prices. It has a long lower shadow than the upper shadow. Traders often interpret them as a positive bullish reversal.

Inverted Cross Doji

It is the complete opposite of the candlestick mentioned above. It consists of an equal opening and closing prices making its body completely just a form of horizontal line. The upper shadow is longer than the lower shadow and they often indicate bearish market reversal.

As of now, these are the most common types of Spinning Tops that you will most likely encounter on your trading activity. However, there are more different types of them but not really necessary since they all indicate the same principle of telling you about high probability of reversal trend that might occur.

Morning Star - Bullish Reversal Signal

The life of being a Forex Trader can be very boring and the worst part is it's very exhausting or stressful. If you intend to become a Trader, you must have the determination to succeed or you will simply end-up losing a lot of money. Read through various Books and participate of Forum Communities. I'm sure that you will have a good start and minimize the risk of losing huge amount of your capital.

I have been previously discussing about Candlestick Patterns which is one of the basic and important aspect that every Trader should try to learn and fully understand. On this post, we are going to deal with the Morning Star. This is a type of Candlestick Pattern that provides you an early signal for the Bullish Reversal.

The Morning Star Candlestick Pattern composes of three candles. The first candle should be tall composing of a bearish Real Body. The second one can either have a Bearish or Bullish body that gaps below the first candle. The third candle must have a Bullish body that closes at least 50 percent from the body of the first previous candle.

On some information that you may come across, they may say that there must be a gap between the candles. However, it is still considered as valid even there is no gap because intraday Forex candles doesn't always make a gap. You may still count them as a Morning Star.