The inverted hammer
can only occur
after a sustained downtrend, the
stock is in all probability
already oversold. Therefore, the inverted hammer signifies that traders who have held long positions
in the security, most of whom are now showing large losses, often are quick to dump their shares by
selling into strength .
For example = STEC
The bullish harami
candle can occur in either bullish or bearish trends, but the colors are reversed: A
large black body precedes a
smaller white real body, and this gives out a bullish
precedes a smaller
white real body, and this gives out a bullish signal: it implies that the stock is poised to move upward.
In signal: In either bullish or bearish haramis, the upper and lower
shadows can be of any size, and
theoretically could even go above the real body of the clear candle day.
In practice, however, the
harami day’s shadows often are small and typically are contained well
within the real body of the
previous day’s candle.
In order for the Bullish Harami signal to be valid, the following conditions must exist:
•
The stock must have been in a definite downtrend before this signal occurs. This can be
visually seen on the chart.
•
The second day of the signal should be a white candle opening above the Close of the previous
day and closing below the Open of the previous day’s black candle.
For example = CPF
In order for the Bearish Harami signal to be valid, the following conditions must exist:
•
The stock must have been in a definite uptrend before this signal occurs. This can be visually
seen on the chart.
•
The second day of the signal should be a dark candle opening below the Close of the previous
day and closing above the Open of the previous day’s white candle.
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