Inverted Hammer followed by invetered candle

Oct 18, 2021 09:25 AM 1 Answers
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Being newer to chart reading, I like to use Market Smith and OHLC in TD Ameritrade.  In the most recent video you talked about an inverted candle and hammer on 10/16 at 2:35 minutes approximately.  Can you elaborate on what these actions mean? Is it a sign of a reversal etc?


Stephen Rager


Thank you for the question.  I believe the "inverted hammer" that you reference is in regards to the DLO chart. This is a bullish candle and a sign of a short-term bottom. DLO closed at the low of the day on Monday October 11 after selling off for several weeks. This is a sign that the sellers are exhausted, and everyone who wants out of this stock has sold their shares.

There are no foolproof chart patterns, and they don't always work. But, it did work in the case of DLO last week. The stock traded higher in four consecutive sessions after it printed that inverted hammer candle on Monday, October 11. It also helps that it filled its gap after their most recent earnings report.With the reversal in the Nasdaq last week, I am sure we can find more inverted candle patterns as it was a pretty sharp reversal in the index.

Have a blessed day!



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Oct 30, 2021

Thank you, this was very helpful! Stephen Rager

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