AI
Monday, June 24, 2013 5:04:56 PM
Hammer Time
Well … didn’t happen.
Much of the middle of the day was spent with Bullish Hammer reversal patterns in eight major indices. That tends to get me all excited because my definition of those almost always has successful bullish breakouts.
$SPX in the image below (made when it was making a Hammer pattern) is showing that it is sitting above the strongest SR level around, centered at 1,556. It quickly bounced off of that narrow SR range within a few minutes within the second quarter of the day. I’ve read that some traders would have you wait for a buy signal after price successfully tests support in the range of S&P 1510 to 1520 (that level below the one mentioned above). Pythia is anxious to party now. My vote is to go with Pythia -- she’s much better looking than those other traders.
Candlestick traders would have you wait for a favorable candlestick reversal pattern then trade on a Close above the center of the pattern’s last candlestick body. Pythia isn’t so patient, and will have you go Long if the next day’s Close has a green body and a higher Low than the previous candle. It’s a shoe sale, so why wait? If the next day is a Doji then Pythia currently says wait another day for a Close higher than the Doji’s close, and body color doesn’t matter in that case. So that’s another day (or more) of delay. That rule may change in the future to favor ignoring the Doji and going Long on the Doji when the previous day’s candlestick pattern is one of a select few (needs backtests to confirm that).
With today’s intraday range, the entire bullish run from 1550, starting in late April, has been retraced.
Well … didn’t happen.
Much of the middle of the day was spent with Bullish Hammer reversal patterns in eight major indices. That tends to get me all excited because my definition of those almost always has successful bullish breakouts.
$SPX in the image below (made when it was making a Hammer pattern) is showing that it is sitting above the strongest SR level around, centered at 1,556. It quickly bounced off of that narrow SR range within a few minutes within the second quarter of the day. I’ve read that some traders would have you wait for a buy signal after price successfully tests support in the range of S&P 1510 to 1520 (that level below the one mentioned above). Pythia is anxious to party now. My vote is to go with Pythia -- she’s much better looking than those other traders.
Candlestick traders would have you wait for a favorable candlestick reversal pattern then trade on a Close above the center of the pattern’s last candlestick body. Pythia isn’t so patient, and will have you go Long if the next day’s Close has a green body and a higher Low than the previous candle. It’s a shoe sale, so why wait? If the next day is a Doji then Pythia currently says wait another day for a Close higher than the Doji’s close, and body color doesn’t matter in that case. So that’s another day (or more) of delay. That rule may change in the future to favor ignoring the Doji and going Long on the Doji when the previous day’s candlestick pattern is one of a select few (needs backtests to confirm that).
With today’s intraday range, the entire bullish run from 1550, starting in late April, has been retraced.
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