Last week closed with what is typically a bullish hammer candle on Friday, but it's important to understand the 'flip side' of such candles. Playing candles is playing probabilities, there is a bullish and bearish one in each hammer candle:
Here is an example of a bullish hammer candle that failed:
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USD - Has been consolidating the last 4-5 weeks, a thrust to the upside could challenge a long term trend line above for the 4th time. As you know I'm a fan of the 'Rule of 4' (Ro4) which has a high probability of producing impulsive behavior when triggered.
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AUD/USD - Has produced a great example of a Ro4 that was triggered to the downside:
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Trade School - As part of my QG3 market signal service, I identify chart patterns that offer a high probability of providing a successful trading outcome. Recently I outlined a successful Ending Diagonal pattern in GBP/USD and a key bearish Hammer Candle as part of an ABC fibo price relationship in EUR/USD.
GBP/USD - Ending Diagonal
Outcome:
EUR/USD - Bearish Inverted Hammer on the Daily and ABC Fibo relationship:
Outcome:
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Good Hunting out there,
Quad G
