We all know that forex trading is a high risk business, and managing this risk is a key part of being successful in the longer term, and one element in reducing this level of risk is in trading using simple strategies which have a high probability of success. In this video I explain one of my favourite candles, of which we have seem two classic examples in the last couple of days on both the euro dollar and the pound dollar daily charts, but this signal appears in all time frames and in all markets, and is one that I trade whenever it appears, as I believe it offers a high probability trade almost every time.
Hi Anna
Very useful thoughts as usual, thank you – I presume the hammer candle is a “reversal” indicator – i.e. you could have the reverse situation after a period of increasing prices?
Regards
Alex
Hi Alex – many thanks for your kind comments – much appreciated. Yes your’re right, the hammer candle is a strong reversal signal following a downtrend in the market, and the ‘sister’ of this candle is the shooting star which has a small body and a deep wick to the top of the candle, so an upside down hammer candle if you like, and appears at the top of an uptrend. It looks like a flag pole on the top of a mountain, and again is a classic reversal signal, in this case from bullish to bearish, whilst the hammer is from bearish to bullish. Hope this helps and thanks once again – regards Anna