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Lesson #11 Hammer Candle formation (This is a

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Stock Analyzer   Friday, 07/22/05 08:56:50 PM
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Lesson #11 Hammer Candle formation (This is a static chart, it will not update for teaching purpose, the chart below the example WILL update to show if the theory is correct)


A hammer is a candle that is found at the bottom of a downtrend and indicates a "possible" trend reversal coming. The Hammer must have a wick or shadow at least two times the length of the body A hammer can be either black/red or white in color, it does not matter, white typically means a stronger possibility if I remember correctly.

So in this chart you see a example of a hammer and the example in blue that I drew shows the body and the shadow. The real hammer on the chart was formed today for stock PMED. It has just come out of a long downtrend and "almost" had a hammer Thursday but as you can see there is a "shadow" on top of the body Thursday, so this does not qualify the candle as a hammer, a hammer has NO shadow on top, only on the bottom. A hammer is also a strong reversal candle because with no shadow on top, it means the stock closed at the High Of Day (HOD) To me PMED looks like it may reverse on Monday due to this hammer formation.



Real live chart PMED


SA


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