Rejection Candle Chart Patterns - Hammer

Candlestick Chart Analysis

Hammer Rejection Candle

The Euro moved upwards against the US Dollar after the rejection candle/ hammer candlestick pattern on the 13th of November. There are important Support/ Resistance levels on the daily EURO US Dollar chart. Market currently trades at the daily confluence resistance level consisting of the 20 SMA and further the monthly S1 and the low of October 1st, which both held the market on the 15th of November at around 1.28 (First test). 

During the start of the US session today, market penetrated the 1.28 resistance level (second test) and moved up to the weekly R1. On the 5 min chart we see that market closed at the 1.28 resistance level with a bullish candle at 3:40 p.m. GMT just before  the Euro breached this level (Breakout Timing). The following breakout candle at 3:45 p.m. got high bullish momentum because of the stops placed above the 1.28 level. However, there was no follow through or breakout confirmation on the 5 min chart but market retested the 1.28 level and held 1.28 so far. As long as the Euro holds this level we might see a continuation pattern triggered for a true or false breakout with the start of the new daily candle (Bullish daily candle close at daily resistance-Breakout trading). The next resistance level might be the low of October 11th at 1.2826.

The 4 hour chart shows the two rejection candles on the 13th of November which contributed to the daily rejection candle.

[The hourly chart shows the news shakeout/ stop running on the 14th of November. Market cleared the stops above resistance at 1.2755 (low of Sept. 10th) and then EUR/USD reversed and the logical next target was the recent low to clear the stops of the breakout trader at 1.2724. Stop running is an important driving force in Trading.]

On the hourly and 5 min chart we see that the EUR/USD found support at the low of Sept. 10th and the Euro continued its upward move at 1 p.m. due to the increasing hourly 20 SMA and 200 SMA on the 5 min chart.


On most of the charts we see:

How prices respected support and resistance (blue ellipses), purely stop running behaviour (red arrows), breakout trading setups (red ellipses), continuation chart patterns (most of green ellipses) and support and resistance due to consolidation price zones (orange arrows).

Daily Support and Resistance EURUSD

4-hour Rejection Candles Hammer 

1 hour Hammer/ Pin bar Euro US Dollar Candlestick Chart Patterns

5 min Technical Chart Analysis Euro US Dollar

Daily EURO Support/ Resistance levels

Support and Resistance

EUR USD Technical Chart Analysis

The EURO started to move upward today, after yesterday's news shakeout at 7 p.m. GMT, which cleared the stops above the low of Sept. 10th at 1.2755 and then reversed to clear the stops below 1.2724. 

Today's upward momentum might be the following of the daily hammer candlestick pattern on Tuesday.


The Euro moved higher with the triggering of continuation patterns (green circles/ellipses) and Breakout timing setups (red circles/ellipses) until market reached strong resistance at the 1.28 level. This resistance zone consists of the low of October 1st, the monthly S1, the 61.80 % Fibonacci retracement on the 4 hour chart and the 38,20 % Fibonacci retracement on the daily chart. Market reversed at the 1.28 level and started to move lower.

On the 5 min chart we see how market broke through the downward sloping green trend line at 2:15 p.m. (Breakout trading-prior candle closed at trend line) so that the consolidation/ triangle got terminated.  Market started to consolidate in a  shape of a continuation pattern after the breakout of the triangle and price retested the daily R1, the high and the downward sloping trend line of the consolidation (resistance becomes support-successful retest). The Euro terminated the continuation pattern on the 5 min chart and market broke through yesterday's high with the beginning of the new hourly candle after the previous one closed strongly at resistance (yesterday's high-Breakout trading).

Recent main support and resistance levels have been the low of October 1st and September 10th and the high of last Tuesday. Yesterday's high (news spike) is also likely to play an important S/R role.

Daily Support and Resistance EURO Fibonacci retracement

4 hour Daily EURO Fibonacci retracement, Resistance Levels

hourly EURO Support/ Resistance

5 min Support and Resistance

The Chart Analysis of the trading days before


On the daily chart (first chart) we see that the EUR/USD created a hammer candlestick pattern yesterday. Market moved higher and the Euro is currently trading at the low of September 10th at 1.2755 (pink line) and the daily 10 SMA. Slightly above is the hourly 200 SMA, the weekly Pivot point and the daily R2.

Yesterday's high at 1.2729 (thick blue line below) initially acted as resistance but after the level got broken the blue line acted as support and market bounced back from yesterday's high (successful retest, changing role of daily S/R levels). The rising 20 SMA on the hourly chart also provided support at 7 a.m. together with the consolidation price zone (green ellipse, orange arrow) and again at 4 p.m..

1 hour  Hammer Chart Pattern | Daily S/R | SMA

Candlestick Patterns Hammer

Price Reversal

Hammer Candlestick

1 hour Candlestick Patterns Hammer, Price Reversal

Candlestick Chart pattern

The Euro had a relatively quite session again today. Market price broke out of yesterday's consolidation pattern with the beginning of the new daily candle (Breakout trading) and the Euro made a new daily low but market hold at the daily S2 support.

At 10 a.m. the Euro created a hammer candlestick pattern and EUR/USD market price started to move upwards.

The three consecutive lows from 4 a.m. to 10 a.m. might be seen as a Three Drives pattern. Interestingly, the Euro always closed above the daily S2. The three consecutive lows tempered many breakout traders to go short following the breakout of yesterday's consolidation pattern.

These false breakouts caught many traders in the wrong position which often leads to a price reversal. The hammer pattern (Price rejection) initiated this price reversal and the EUR/USD moved back into yesterday's consolidation pattern. Yesterday's consolidation price zones acted as resistance as price approached this level again and the Euro reversed back down.

The 5 min EUR/USD chart shows some Fibonacci levels which could helped the trader to find entry and exit points. The red arrows show some false breakouts, which occurred today.

The 5 min chart also shows that we did not have a confirmed breakout through the daily S2. See Unconfirmed Breakout Candle

5 min EUR/USD Chart Pattern

Flag patterns, Pennants, Ledges

Continuation Trading Chart Patterns

Trading Flag patterns, Pennants and Ledges

EUR/USD

4 hour  Chart Pattern/ Analysis

 continued its downtrend today in the beginning of the European trading session with the triggering of the Head and Shoulders pattern on the 5 min chart, which occurred at the daily R1 and the 20 SMA on the 4 hour chart after clearing the stops above the consolidation high.

On the 5 min chart we see many Continuation chart patterns (Flag patterns, Pennants, Ledges - see green circles), which got triggered and market resumed its downward trend. Very often the EUR/USD made attempts to renew its downtrend with the beginning of the new trading hour for a true or false break of support, frequently after closing at support level  e.g. 8 a.m., 9 a.m. 11 a.m. 1 p.m. and vise versa for the uptrend at 3 p.m. and 5 p.m. (see red circles on hourly chart - Breakout Timing).
The Consolidation pattern between 11 a.m. and 12:20 p.m. GMT can be seen as a bear flag of the recent impulsive downward move from 10 a.m. to 11 a.m. (5 min chart).

The daily Pivot point changed its role from support to resistance after the break of this level 8:45 a.m. (see 5 min chart).

The Euro found some support at the Fibonacci Cluster at around 1.2692, the 61.80 % Fibonacci Extension of the recent 4-hour swing down and the 100 % Fibonacci Extension level on the 5 min chart. From there, market leveled off.

1 hour Continuation Chart Patterns Analysis

5 min Continuation Chart Patterns (Flag patterns, Pennants, Ledges)

 

Trading Gartley patterns

The Gartley Chart pattern 

Euro US Dollar Trading Strategies

Euro Us Dollar

 reversed down yesterday starting from the daily 10 SMA and closed at the important daily support level from the September 10th low. The closing of a bearish candle at support increases the chance of a true or false breakout through the support level vice versa with the starting of the new candle, which has happened with today's daily candle. These breakout timing strategies are marked with a red ellipse/circle on the charts. 

Market continued its current downtrend in today's European session after the termination of the consolidation pattern on the hourly chart, which consists of the typical three swings. The EURO made a fresh new low at the 61.80 % fib extension from the recent daily swing down and market created a kind of hammer pattern, leading to a new consolidation.

On the 5 min chart we see that the weekly pivot, the 200 SMA and particularly the low of September 10th, which changed from a support to a resistance level due to the recent breach, provided resistance throughout the trading session. The red arrows show the stop clearing/ stop fishing, where market only temporarily broke important pivot points to clear the stops before reversing. 

The green ellipses/ circles show consolidation patterns. On the 5 min chart there were two interesting consolidation patterns, a bull and a bear flag. The orange arrows show that the price zone of the consolidation patterns often provide some support/resistance when price moves back into this zone for the first time. Furthermore, fibonacci levels helped to find potential reversing points.

Daily Gartley Chart pattern

1 hour Euro US Dollar trading strategies

5 min Euro US Dollar trading strategies

Technical Pattern Gartley

EURO /USD Chart Reading

Trading the Gartley pattern

The Euro found support at the 100 % Fibonacci Extension Cluster/ Gartley pattern projection yesterday and moved up from the target of the Gartley Pattern to the daily 10 SMA. From there, market moved lower with strong bearish momentum and created a new daily low.

On the 4 hour chart the EUR/USD continued its downward trend with the beginning of the new 4-hour candle at 12 a.m. after the previous candle closed at the 10 and 20 SMA Support level (Breakout Timing).
 The Euro found support at the daily S2 after clearing the stops below the important low of September the 10th (thick orange line). However, so far market did not close below this daily support (see hourly chart).

Gartley Techncial Chart pattern

4 hour Euro 100 % Fibonacci Extension

1 hour Euro Dollar Technical Chart Analysis

Technical Chart Analysis of the day before

The Gartley chart pattern

played out well. Currently, the EUR/USD is holding at the Fibonacci Support zone, which consists of the two 100 % Fibonacci Extension levels. Furthermore, this support zone coincides with the Daily S1 and the consolidation price zone of the prior consolidation pattern on the left side of the Euro US Dollar Chart. We also had a nice Doji Candlestick chart pattern on the EUR USD.
The red circles on the daily Euro chart mark some Breakout Timing Strategy, whereby market closed at the support level with a bearish candlestick (20 SMA and daily support level) and breached support with the new daily candle.

Gartley Chart Pattern, Doji, Breakout Trading Strategy

Candlestick patterns Hammer and Evening star

Hammer and Evening Star

Evening Star and Hammer Chart pattern

4 hour Evening Star pattern

EUR/USD

retraced up to the weekly Pivot point where market formed a kind of Evening Star pattern and market price started to turn around.

On the 1 hour Euro US Dollar chart (last 10 candlesticks) we see how market closed at support and breached it with the beginning of the new hourly candle [Breakout Timing setup-red ellipses, market closed at each support level (10 SMA, 20 SMA and daily pivot point)] and broke through it with the new hourly candle).

The repeated pattern of a bearish candle close at a support level and the following break of this support level with the beginning of a new candle often occurs in a strong bearish trend or a surge in downside momentum.

1 hour Hammer candlestick

5 min Pivot points

Important psychological chart levels

1.30 price zone in EURUSD

Trading Important Chart levels

The Euro

found resistance at the Head and Shoulders neckline yesterday and formed a Three Drives pattern (see 1 hour chart). From this top, the EUR/USD moved down whereby the downside momentum increased today.

The hourly 200 SMA, the daily S1 and the weekly Pivot point provided temporary support for the Euro before the market moved lower to the psychological important 1.30 level.
Many stops can be anticipated below this major psychological level so that at least a temporary breach of this support level could happen to clear some stops. The 61.80 % fib extension at 1.3005 on the 4 hour EUR/USD chart got respected by the 4 hour candle starting at 8 a.m. GMT before the new 4 hour candle breached this important psychological 1.30 level (Timing setup).

The strong 5 min momentum candle at 1.30 p.m. shows the momentum created by the stop triggering and the follow through. The EUR/USD went lower to the next major support level at around 1.2957 created by the 100 % fib extension and the 200 SMA on the 4 hour chart and the daily S3, which supported the Euro US Dollar so far.

On the daily Euro chart we have a potential bearish "222" Gartley pattern.

4 hour Fibonacci extensions

Daily Gartley pattern

1 hour Head and Shoulders pattern 

 

5 min Neckline break, Momentum

Head and Shoulders pattern and Neckline

Chart Pattern targets

Neckline of the Head and Shoulders 

Euro US Dollar

triggered the Head and Shoulders pattern with the break of the neckline and the Euro moved lower to the Head and Shoulders target, which is marked on the chart with the 100 % Head and Shoulders target. From there, the market retraced back up to the Head and Shoulders neckline and formed a kind of Wedge pattern / Three Drives pattern before the EURUSD reversed and moved down again (right side of the chart).

Overall, the two hammer candle stick pattern (right side of the hourly chart) and the 61.80 % as well as the 100 % Fibonacci extension levels on the 5 min chart helped us in predicting support and resistance zones.

The first hammer candle  occurred at the consolidation price zone of the prior flat "overnight" consolidation pattern of the 21th of October, which acted now as support. The price up moves after the first and the second hammer candlestick created the kind of Wedge/ Three-Drives pattern and market reversed to the downside after the Euro touched the brown neckline of the Head and Shoulders  at around 1.3080.

As often, market penetrated an important Chart level like the neckline and the high of the recent overnight consolidation zone of the 19th of October to clear the stop orders and trigger the limit breakout orders before reversing strongly (False Breakouts - Market Manipulation).

1 hour Head and Shoulders pattern, Fibonacci target

The Wedge / Three-Drives Pattern is better visible on the 5 min chart. Furthermore, we had two Head and Shoulders pattern on the 5 min chart, see the red lines marking the Head and Shoulders pattern. Both patterns worked out relatively well.

The useful Fibonacci extension levels (61.80 and 100 %) are also visible on the 5 min chart below.

5 min Head and Shoulders pattern and Wedge

See also Chart Pattern Manipulation to understand that famous chart patterns are tricky.

The Technical Chart Analysis of the trading days before below

The EURO

found support at the Head and Shoulder price target (100 % fib extension of the Head and Shoulders  height moved to the neckline break), daily S2 and 100 % Fibonacci swing projection. Pivot Points and Fibonacci extension levels only held the market temporarily. The red ellipses underlined the Breakout Timing Strategy (Break of support of the new hourly candle after previous hourly candle closed bearish at the support level).

1 hour Head and Shoulders pattern target

5 min Three Drives pattern

The Developing of the Head and Shoulders pattern

Head and Shoulders neckline and Fibonacci Analysis

on hourly chart but neckline and daily S1 held the market so far. The Euro found resistance at the weekly S2.

In today's session the Euro often found resistance and support at 61.80 % and 100 % Fibonacci extension levels and market often cleared the stops (stop fishing - false breakout) below recent lows (see red arrows on 5 min chart).


The Fibonacci Extension and Retracement levels as well as the Pivot Points revealed important Support and Resistance zones (5 min chart analysis)

1 hour  Head and Shoulders neckline

1 min  Head and Shoulders pattern

5 min Fibonacci levels 

Typical Consolidation Pattern

Consolidation Price Zones 

Consolidation Patterns with three Swings

IF you observe the consolidation patterns (green circle) then you will recognize that most of them consists of three waves/ swings (Typical consolidation pattern) before the consolidation terminates and price renews its prevailing trend. Very often these consolidation price zones also provide some support/ resistance when price captures this price zone again for the first time (orange arrow). More information about Consolidation patterns and Consolidation price zones are at: Support and Resistance Chart Patterns

5 min Typical Consolidation Pattern

Three swing Consolidation formation

The Chart pattern analysis below again shows the typical three swing/ wave consolidation patterns (The two large ellipses illustrate the typical three swing consolidation formations), followed by the breakout of price in trend direction after the termination of this consolidation formation type.

Consolidation price zones in the EURUSD

On the 5 min chart of the EUR/USD  below we see the formation of the pin bar candlestick pattern at the price zone of the recent consolidation pattern.The Euro moved up strongly and price momentum recedes during the formation of the larger consolidation pattern at the daily R2 Pivot (green ellipse). The price breakout of the larger consolidation  (red ellipse) occurred at the beginning of the new hourly candle (11 a.m.) (Breakout timing).

However, the price breakout was very shallow and market retested the consolidation price zone (blue arrow) before the Euro started to moved up further to the next smaller consolidation pattern at the daily R3 Pivot, the weekly R2 Pivot and the 100 % Fibonacci Extension level.

5 min Euro Analysis, Pin bar, Consolidation pattern

Typical three swingconsolidation/ continuation pattern on the 5 min chart


Potential Inverted Head and Shoulders pattern

The Euro moved lower and created a typical three swing consolidation pattern around the 100 % Fibonacci Extension level. Price broke out of the three swing Consolidation pattern at the beginning of the new hourly and 4-hourly candle (red ellipse), which is often an important Breakout Timing (GMT).


The EUR/USD found support at the 61 % Fibonacci Extension of the recent swing down moved to the high of the consolidation pattern. Market formed  a kind of inverse Head and Shoulders pattern, which might led to the price reversal of the EUR/USD to the upside

5 min  Inverted Head and Shoulders pattern

Butterfly Sell chart pattern

Butterfly Sell price target

EUR/USD Technical Chart Analysis

On Friday, we had a perfect butterfly sell chart pattern. Today, the Euro initially went down (Evening Star chart pattern from Friday) and found support at the 61.80 %  fib retracement (1.2889) and resistance at the hourly trend line (blue).

1 hour Butterfly sell pattern

Typical Consolidation Pattern

On the 5 min EURUSD Chart below another typical three swing consolidation pattern is visible just at the daily Pivot Point support. The breakout of the consolidation pattern occurred with the start of the new hourly candle at 12. a.m. (Important Timing Point). The up move of the Euro found resistance at the hourly downward sloping trend line.


Interestingly, the consolidation pattern and the false breakout to the 161 % Fibonacci level at 1.2979 is very similar to the butterfly sell chart pattern. After the false price breakout to the upside to the major 161 % butterfly sell target market reversed and retraced the up move. The Euro targeted the final 161 % butterfly sell target at 1.2940, where the EURUSD paused a while before market continued the downward move to the weekly Pivot Point. The weekly Pivot provided solid support (together with the 100 % Fibonacci Extension level of the recent swing at 1.2932) and the Euro bounced back up to the daily Pivot Point.

Overall, the daily Pivot Point provided solid support at 11 a.m.. After the confirmed break of the daily Pivot to the downside at around 3 p.m. the daily Pivot changed its role from support to resistance as often after a confirmed break of important chart levels.

5 min EURUSD Analysis

Butterfly price targets

Trading the Butterfly pattern

A Butterfly chart pattern was in today's Forex trading session in the EUR/USD on the 5 min chart (last chart).

The Euro found resistance at the 127 % butterfly sell target (5 min chart) and from there the EUR/USD went straight to the 161 % butterfly pattern target. The consolidation price zone of the triangle pattern (hourly chart) and the hourly 200 SMA also gave some support at the 161 % butterfly pattern target at around 1.2940.

On the 4-hour chart we see an Evening Star pattern.

4 hour Evening Star pattern

1 hour triangle breakout

5 min butterfly sell pattern

Inverted Head and Shoulders

Inverted Head and Shoulders neckline

The Euro found support at the monthly pivot and resistance at the daily pivot. On the 5 min chart we see a nice bull flag at 12.30 p.m.. Market also found support at the uprising trend line (green) on the 5 min chart. The downward sloping 20 SMA (purple line) on the hourly provided only temporary resistance during the formation of the right shoulder of the head and shoulders formation.

On the 5 min EUR/USD chart we see many Continuation patterns (green ellipses). The ongoing trend paused during these continuation patterns (mainly Flags and Pennants)  until the Continuation pattern got terminated (mostly after three swings).

The 5 min and the hourly Chart also show how market reversed at the daily Pivot Point.<

1 hour Inverted Head and Shoulders pattern

5 min EUR/USD Chart Analysis, Pin bar

Fibonacci levels and Bear Flags

Fibonacci extension levels

Flag patterns

The EUR/USD Chart Analysis

shows the importance of the 61.80 % and 100 % Fibonacci extension levels, which market often respects as support/ resistance, at least temporarily. On the hourly Euro Chart we see that market respected the 61.80 % Fibonacci Extension level at 8 a.m..Market retraced up from this Fibonacci Extension level to the downward sloping 20 SMA (purple line) and the 61.80 % Fibonacci retracement level. From this resistance level, which market approached at 1 p.m., the EUR/USD rolled over and continued its downward trend to the 100 % Fibonacci Extension level. The 61.80 % Fibonacci Extension level often provides only temporary support/ resistance. The 100 % Fibonacci Extension support level got further strengthened due to the weekly S1 at 1.2859.

1 hour Fibonacci extension levels

On the 5 min Chart we see that the EUR/USD consolidated at the uprising trend line and the daily S1, formed a bear flag (Continuation pattern) and market finally broke through the support level of the uprising trend line. Market took out the stops and triggered the limit breakout orders below the recent low (left side of the 5 min chart) and the Euro started to retrace back into the Consolidation zone (Market Price Manipulation) of the prior bear flag, which now acts as resistance (Consolidation price zones). Furthermore, the daily S1 changed its role from support to resistance after the confirmed break of this level on the 5 min chart.

5 min EUR/USD Chart Analysis

Another EUR/USD Chart Analysis in regards of Fibonacci Extension levels and Bear flag pattern:

4 hour Fibonacci Extension

Fibonacci and Bear Flag

continued its down trend today with the triggering of the bear flag pattern. The 10 SMA on the 4 hour chart provided resistance to the Euro and the  EURUSD depreciated further. The Euro found support at the daily S1 and 61.80 % Fibonacci extension (1 hour chart) and market turned around after the creation of the hammer candlestick pattern on the 5 min chart. The EUR/USD moved up to the prior consolidation price zone (bear flag - hourly chart-orange arrow), which acted as resistance.

1 hour Bear Flag pattern, Hammer

5 min Hammer pattern