Pop Quiz! What do the following patterns have in common?
Marks to you if you answer all of them are bullish signs. Bonus marks if you named them: double bottom, cup and handle, inverse head and shoulders, engulfing and morning star. More marks if you stated that they are reversals(except for the cup and handle).
Now the interesting common factor among them I want to point out is this: if you took each pattern and combine all the candlesticks in each pattern from start to end into a single candlestick, you will get this:
Yes all the bullish reversal patterns, boiled down to their essense, are bullish hammers. That is the gist of a reversal
isnt it? Under the backdrop of a downtrend, the price suddenly plunges and then reverses
its trend and recoups all its losses in more or less equal measure.
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