Today, 24th May, as PM Theresa May tenders a weepy resignation, producer and presenter Jeremy Naylor of IG TV interviews Lee Sandford of TradingCollege.co.uk
His focus is on the hammer candlestick, which some confuse with the hanging man – one of my favourites! Lee correctly points out that as well as the shape of the candle, with long low wick and settlement towards the upper end of the period’s range, one must take into consideration the prevailing trend; so important. Too often I’ve seen head & shoulders patterns labelled after truncated, puny, so-called trends.
Using charts covering several time frames, he introduces the idea of ‘confirmatory hammers’. Think a little and you’ll quickly understand what he’s getting at; the rejection of lows again and again. The four moving average periods used are not explained, though he uses them as support areas.
Unusually, he suggests that the hanging man candlestick is one found in a continuing trend, unlike the hammer’s reversal; personally I’m not so sure. He also uses unusually coloured charts: Yes, the almost obligatory red and green on a black background. But also yellow, blue and pale blue candles; suggesting this is a proprietary charting system, I have no idea what the choices involve. Likewise volume histograms are coloured pink and pale green – no idea here either.
He moves on to discuss recent equity index moves inside symmetrical triangles. Waiting for a break at the apex, I totally agree that often a false break ensues, and a move in the opposite direction is highly likely.
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