A. Doji
Doji describes indecision market. There is no “real body” at this shape. The opening price is exactly the same with the closing price.
Doji is not a turning point in the market but it is the opportunity for the market to turn. It’s a moment of indecision where market is still confused by price direction.
B. Hammer and Hanging Man
Hammer and Hanging Man pattern have identical pattern. What makes them different is only where are they located at the chart. Hammer ends down trends which stop the down trends from going further. Meanwhile, Hanging Man ends up trends which stop the up trends from going further.
Both of them (hammer and hanging man) have two types of shape:
Hammer
Hammer with Empty Candlestick
There is buying pressure at the hammer candlestick which make the closing price is located above the opening price.
According to Munehisa Homma’s theory, this pattern would be followed by bullish pattern.
Hammer with Shaded Candlestick
But what happen when the hammer pattern is a shaded one (not an empty candlestick)? Well, there is still buying pressure at the period but not as strong as we’ve been discussed at the previous example. This time, the closing price is below the opening price.
According to Munehisa Homma’s theory, this pattern would be followed by bullish pattern but the angle is much shallower than the previous one.
Hanging Man
Hanging Man with Shaded Candlestick
There is selling pressure at the hanging man candlestick which make the closing price is located below the opening price.
According to Munehisa Homma’s theory, this pattern would be followed by bearish pattern.
Hanging Man with Empty Candlestick
But what happen when the hanging man pattern is an empty one (not a shaded candlestick)? Well, there is still selling pressure at the period but not as strong as we’ve been discussed at the previous example. This time, the closing price is above the opening price.
According to Munehisa Homma’s theory, this pattern would be followed by bearish pattern but the angle is much shallower than the previous one.
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