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Context: Nifty has surpassed the 19,850 hurdle and formed a hammer candlestick pattern. Analysts suggest that a sustainable move above 19,900 levels could lead to Nifty reaching new all-time highs.
What Is a Hammer Candlestick?
To confirm a hammer candlestick, traders should look for the following criteria:
A hammer candlestick is not a guarantee that the price will reverse, but it provides a strong signal that the trend may change. Traders should use other technical indicators and market context to validate the hammer candlestick and enter a trade accordingly. For example, traders can look for a bullish confirmation candlestick, such as a green engulfing or piercing pattern, in the next trading session. Alternatively, traders can use volume, moving averages, trend lines, or other tools to confirm the reversal.
Conclusion
PRACTICE QUESTION Q. What does a hammer candlestick pattern suggest about market sentiment? A. Strong bearish trend B. Potential reversal to the upside C. Continuation of the current trend D. Indecisive market conditions Answer: B Explanation: A hammer candlestick typically occurs after a price decline, signalling a potential shift from bearish to bullish sentiment. |
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