Another good session for trading hammer candlesticks from the London open…
Plenty of opportunities for these trades today, as the chart at right shows. I missed the entire session personally, so I can’t vouch for every aspect of how the trades would have gone had they been physically put on. Not all of them paid off, but if you had taken every one you should be ahead.
The first circle shows two bull hammers moving off and closing above a round number indicated by the grey dotted line. Entries here would have been stopped out.
The second white circle indicates a signal for a sell, but you wouldn’t have been taken in with a limit order placed 1 to 2 pips ahead of the candle direction, as I would suggest you do with these trades.
The third circle indicates another bearish hammer, this time at a yearly pivot indicated by the red line. Most traders don’t place much store in yearly pivots it seems, but I do personally plot them on the chart and take notice of them. I would probably not have taken this particular trade given the fact of the round number just below.
The fourth white circle is for two further bearish hammers. An entry placed just below the round number would have taken you in, and as long as your stop was behind the tail of the first hammer you should have escaped being taken out by the retrace.
The final white circle shows the last hammer of the session, yet another bear hammer. With your stop loss just behind the tail of the hammer, or even slightly above the polarity indicator, you would have enjoyed a nice ride on this one.
Good trading to all and be safe out there!