Hammer pattern or Hanging man is the different names of Hammer candlestick. It often appears in Japanese candlestick chart, especially at the end of a downward trend. Hammer is categorized as a reliable signal candlestick for opening a trade. This article will show you the shape of Hammer candlestick and how to use it when trading.
What is Hammer candlestick pattern? How to recognize it
Hammer pattern is the kind of candlestick that has a short body at the top of the candlestick and long lower wick. Its color is not important. It may have a short upper wick or no upper wick.
At first, this kind of candlestick often appears at the end of a downward trend, under the form of the bearish candlestick with long shadow. However, the buyers take advantage and make the price rise. Therefore, the candlestick’s body becomes shorter and has a long lower wick. When a Hammer candlestick appears, it’s time to open an UP order in Binomo.
How to trade in Binomo with Hammer candlestick pattern
Although it is a reliable sign, the sign of Hammer candlestick is not always accurate. Thus, you should use this indicator in combination with other indicators in order to guarantee the profitability of the trade:
Hammer candlestick in combination with support
Requirement: 5-minute candlestick + the support level. Open orders with the expiration time from 5 minutes.
How to open an order = The price tests support level + Bearish Hammer candlestick.
Explanation: Support is the level where the price reverses when it does not has enough momentum. If the price tests support level with a Hammer candlestick, it is the sign to enter a trade.
Hammer pattern and RSI
Requirement: 5-minutes Japanese candlestick + RSI indicator (30-70). Open Up orders from 5 minutes to 15 minutes.
How to open an order: RSI at oversold zone + Hammer candlestick as a signal.
Explanation: The price will rise again when RSI reaches the oversold zone (under 30). Hammer candlestick is the sign.
Some notes when trading with Hammer pattern in Binomo
Hammer is the sign to trade, but you need to pay attention to these 2 points
- The signal is a Hammer candlestick and the other indicator you use should also give a clear sign. If not, you can absolutely ignore the trading point and wait for another chance.
- This is a reversal trade. You should not continue opening orders right after when the first one was wrong. Be patient and wait for another clear signal.
We have shown you how to trade with Hammer candlestick in Binomo. If you have any questions, just leave a comment below. We will assist you right away.