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Reverse Pattern Forex Strategy Introduction

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Reverse Pattern Forex Strategy Introduction

To form that could qualify as a turn, there must be a previous trend that will reverse. Bullish reversal pattern (bullish reversal) requires the prior decline, while bearish reversal (bearish reversal) requires the previous upward trend. The direction of the trend can be determined by the trend lines, moving average (moving average), or other aspects of technical analysis. The following types of sound in the Serbian language quite strange, so we’ll stick to the original name.

Hammer and Hanging Man look identical but have completely different meanings,depending on the movement of the previous prices.Both have small bodies of green or red candles,long lower shadows and short or no upper shadow.

scalping-hammer

Hammer is a bullish reversal that forms during a downtrend. So called because it looks like the market sharply to the bottom. When prices fall, hammer gives a signal that is close to the bottom and will start again raise prices. The long lower shadow indicates that sellers pushed prices lower, but buyers were able to overcome this selling pressure and closed the price near the opening price.

If you see a hammer, it does not mean you automatically place an order to buy or sell. It takes more ‘bull’ confirmation before it is safe to pull the trigger. Good confirmation would be when the white candle closed above the open price candles on the left side of the hammer. Inverted Hammer and Shooting star also look identical.The only difference between them is the trend downward or upward.Both have small bodies (filled or hollow),long upper shadows and small or no lower shadow. The inverted hammer occurs when price falls, suggesting the possibility of a reversal. The long upper shadow shows that buyers tried to raise prices. However, vendors have realized what customers are doing, and they tried to push the price back down.

Fortunately, customers are strong enough and managed to close the session near the open price. Since the sellers were not able to close the lower price, this is a good indication that anyone who wants to sell, but sold. And if there are no more sellers who is left? Buyers Shooting star is a bearish reversal that looks exactly like a reverse hammer but occurs when price rises. Its shape indicates that the price is open at the bottom, let loose, but settled back to the bottom. This means that customers are trying to push the price up, but sellers come and overwhelm them. This is a clear bearish sign since there are no more customers, since they were all killed by them.

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