Is the hammer chart patern still effective?
The hammer pattern is a single candlestick pattern that typically appears at the end of a downtrend. Visually, it resembles a hammer, with a small body near the top and a long lower shadow. The long lower shadow signifies that sellers pushed the price significantly lower during the session, only for buyers to regain control, pushing the price back up and closing near the opening level.
BACKTEST
william
3/8/20241 min read
Our team conducted backtests on the hammer chart pattern across all major forex pairs (EURUSD, AUDUSD, USDCAD, NZDUSD, GBPUSD, USDJPY, USDCHF) and Gold (XAUUSD) across various timeframes (M5, M15, M30, H1, H4, D1).
To be honest, the results did not surprise me. As we are aware, a single candle pattern is unlikely to yield a very high win rate.
It was observed that the higher the timeframe, the greater the winning rate for this candle pattern.
Ultimately, like any technical analysis tool, it is crucial to use the hammer pattern in conjunction with other indicators and analysis methods for more accurate decision-making. As with all trading strategies, risk management and proper analysis are key components for success in the forex market.
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