London forex session trades using the mighty hammer candle…
I’m starting to formalise the entry and exit parameters for these trades. That said, this will probably be the last post I make on London Hammer Trades for a while (unless people are keen to see them continue). I will probably do a series of short posts, videos or course on the strategy at some point in the future.
I was very late getting into the session as I’d had a few meetings in the city. But the time I got back to my trading terminal the London session was pretty much over, but I did get into one very nice trade right at the end.
The chart at the right shows five possible entries. Beginning with the first of the left, this was a reasonable long entry which probably would have paid off. Price had reached a round figure and bounced prior to the start of the London session, and this bullish hammer candlestick was starting from a higher low, so I would very likely have taken this.
The second circle indicates two bearish hammer candles. Price had almost reached the weekly pivot (blue dotted line) just above and rejected, so this would have been a reasonable entry. However, both the hammer candles stopped short of penetrating the monthly pivot (dashed line) to the downside, so this may have kept you out. At any rate, this trade would most probably not have paid off, although you should have been able to exit at breakeven.
The third circle shows a bullish hammer occurring at the weekly pivot and failing to penetrate. I would not have taken this trade, due to that pivot and the fact that price had moved substantially up, in which case I would actually be looking for a short entry as it came back into the range.
The final two circles indicate bearish hammer candles rejecting from the monthly pivot. I entered on the first candle (you can see my stop loss and take profit levels on the chart) and watched as price retraced to once again reject from the monthly pivot. If you had not been in the trade by now the fifth circle showing a further hammer candle failing from the pivot would have been an ideal entry point.
As you can see price charged straight down shortly thereafter, taking me out for my profit at the grey dotted line indicating a round number. I didn’t even have time to move my take profit further down, it happened so fast. I’m not sure what news event caused the fast move down; I had checked the upcoming announcements and couldn’t see anything significant. At any rate, it was a legitimate entry and I had a bit of luck.
I think this strategy is an excellent one to be playing during the London trading session at the moment. I may even try trading it in other sessions. If any of you have done so and have feedback, I’d love to hear it. Also, as I said above I probably won’t be posting many more of these trades unless I hear back from people requesting such, as I have a stack of other work to do on the site.