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In this video, we're going to take a look at the hammer and the hanging man patterns.
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These candlesticks look the same.
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Basically, they look like this or they can look like this with a small body, but the commonality is
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short top with, longer bottom with.
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Looks like a.
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Mallott on a handle, so therefore it's called a hammer.
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It's called a hanging man because they say that when that forms, it is a very grave sign.
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So.
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The difference between the two is where they're placed.
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A hammer is at the bottom of a downtrend, a hanging man is at the top of an uptrend.
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The.
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Inner workings of what's going on is what's important.
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You'll notice that the sellers gain a lot of strength during the day or the hour or whatever you're
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trading, but then the buyers come in and support the market.
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This shows that the sellers are running out of strength.
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And this could be a bullish sign at the bottom of a downtrend, however, at the top of an uptrend,
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there's a few special rules, so.
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Let's take a look and I'll kind of show you what I'm thinking here.
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This is a hammer, this is a downtrend.
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And you can see that they tried to push lower but failed.
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So when you break above the top of the hammer, think about all of the sellers during that hour.
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You know, now the price has gotten above it.
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Well, they're all losing money and they need to buy the market to flatten their position out.
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So essentially, in this case and Litecoin, you're taking a look at where are all the traders position
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and what are the wrong ones doing?
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Well, the wrong ones are covering their buying.
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So price went higher.
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Notice how this one formed, but it didn't get broken above and therefore it wasn't a signal.
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But also notice how the hammer here, they got broken above, ended up being retested and then we rallied
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towards this area.
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So that's classic behavior.
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So this is the hammer in question for the light coin market, remember, this one had formed, but it
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didn't get broken to the upside, so it never really kicked the signal off, so to speak.
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So the first thing you look for ninety nine point ninety nine percent of the time is doesn't make sense
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that this candlestick pattern has occurred where it has.
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I'll move this down to the mid century mark.
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Thirty six fifty and you can see that there was an explosive move to the upside there.
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So obviously there are going to be a lot of orders there.
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So that makes sense.
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You can also see that there was a lot of volume here as well, but we could not break down.
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So that makes sense that we might be running out of momentum.
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Let's go ahead and put.
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Lamarckian, Deon.
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And you can see that at this hammer we had extremes and shortly thereafter we got the cross which kicked
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off the trade.
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You can also, in this particular instance, look at.
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A set of estimates, for example.
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And you can see that the.
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Candlesticks had been spreading, right, but notice how there are the moving averages had been spreading,
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but notice how we slammed right into this moving average.
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Now, that could have been your initial target.
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The reality is, though, and this is important to note about moving averages, support resistance matters
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much more.
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So as we pulled back there and then we formed this other hammer that shows you that the market is OK
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with testing this.
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So that would have given you a little bit more confidence going forward.
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Again, this is a pretty pretty significant candlestick at pretty significant level.
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And as I zoom out even further, you can see just how significant it was.
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So in those cases, you have to be a little bit flexible on how you use these indicators.
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But without a doubt, the support resistance, by far the biggest thing.
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So here.
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A hanging man is right here.
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Now, those of you who are particularly astute may go, well, that looks like a dragonfly.
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Well, they're really kind of the same thing.
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There really isn't a huge difference.
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It is traded the same way here in the sense that we're in an uptrend.
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We pull back, we rally, and then we break down.
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And that is the first sign of support breaking and we went much lower.
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You can also make an argument for that being a hanging man.
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After a quick bounce, we broke down below the bottom of it.
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The buyers lost momentum again, stop loss.
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Give us on the other side of the candlesticks pretty straightforward.
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This is Hlinka, right, in an area that's caused some resistance in the past, you know, we pulled
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back and then we ended up forming that hourly hanging man.
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You can also take a look at.
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The Makdisi, this looks like something that would have suggested that there's probably some momentum
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problems here.
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Yeah, you can see we crossed right there.
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And then rolled over pretty straightforward, and if that didn't convince you that obviously the very
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bearish candlestick that was next certainly should have at that point.
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So in the next video, we're going to take a look at a pattern called three white soldiers and three
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black crows.
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