First time hearing about the hammer and hanging man?

An important principle for judging the reversal pattern is: first of all, we must determine the main trend of the market and understand the general direction. Only when the direction indicated by the reversal signal is consistent with the main trend direction of the market, can a new position be opened based on this reversal signal. For example, assume that during the development of the bull market, a top reversal pattern appears. Although it is a bearish signal, the short-selling is not very sure, because the main trend of the market is still rising; In the top reversal pattern, the confidence of shorting is great.

The K-line types of the reversal pattern include the hammer line and the hanging man. This kind of reversal candle line can be either bullish or bearish. If it appears in a downtrend, it means the signal that the downtrend is about to end is called a hammer line, which means "the market is hitting the bottom with a hammer"; if it appears in a rising market, it means that the upward movement of the market may have ended, called a hammer line. The hanging man, whose shape is also like a dead man hanged on the gallows, indicates that the market cannot be blindly optimistic.

Morphological characteristics:

1. The highest price and closing price of the entity part are both at the top of the candle body, and the opening price is not far below the highest price. The lower shadow line is obviously too long, and the color of the entity (red, green) does not matter.

2. There should be no upper shadow for the hammer line and hanging man, but it is also allowed, and it must be very short. It is generally believed that the lower shadow should be 2-4 times that of the entity.

3. Both, the longer the lower shadow, the shorter the upper shadow, and the smaller the entity, the more effective this type of candle is.

Form principle:

Hammer line: After the market has been short-selling for a period of time, the price keeps falling, the power of the seller is gradually consumed, and the power of the buyer is gradually accumulated. On a certain trading day, the price drops sharply, but at this time the bottom shows a strong desire to absorb. Buyers vigorously push the price up until it reaches the highest closing price of the day or closes close to the highest closing price. The hammer line is generally in a downward trend, indicating that the market may bottom out. If the closing price of the day is higher than the opening price (red hammer line), it is a good sign for buyers.

Hanging man: After the market has repeatedly been long, the power of buyers and sellers has reached a balance. Within a trading day, many parties have worked hard to push up the price. After hitting a new high for the day, they have no intention of maintaining the high level. The suppressed energy of the seller was released instantly, and the price dropped vigorously, but the closing price of the day was still at a relatively high position, close to the highest price, and the actual part formed was quite small. The hanging man is generally in a rising market, indicating that the market may peak, and the negative line is better than the positive line.

Trading straregy:

1. First of all, it should be judged whether it is reliable and whether it is a reversal pattern. It can be analyzed according to the above morphological characteristics, and it is also necessary to see whether the trend on the second day matches the reversal. Do not blindly build heavy positions and enter the market. You can build light positions (such as 1/10 positions or smaller, etc.) Lost bit.

2. When the bearish signal of the hanging man is established, we should also be careful to see whether it is at the top of the market or a relay indicator. The greater the downside gap between the real body of the hanging man and the opening price of the next day, the greater the likelihood of a market top.

3. After the top and bottom are formed, there may be a reverse draw in the market outlook, that is, the price will test the bottom of the hammer line again. As long as the bottom of the hammer line is not broken, the bottoming pattern of the hammer line is still valid.