Hammer & Inverted Hammer

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Yesterday we have discussed about the candle stick patterns. Today let us understand some of the most common candle stick patterns.

Let us discuss about Hammer first. Look at the pattern, you can see that the market participants had lost interest in buying and the market made low but at that point it has taken support and the market has bounced back quite significantly. This is a bullish pattern and market the next day is likely to remain bullish. The significance of this pattern can be seen if there is volume to also support the trend, then you can take long positions.

Inverted Hammer works exactly opposite to Hammer and it is a bearish pattern.

Candle stick pattern alone will not be helpful to take positions, you need to use it along with other parameters like volume and indicators to take wise trading decisions.

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