Detailed explanation of reversal K line: hammer line and hanging line

This type of reversal candle can be either bullish or bearish. If it appears in a downward trend, it represents a signal that the downward trend is about to end, which is called a hammer line, which means "the market is hitting the bottom with a hammer." If it appears in a rising market, it means that the market's upward movement may have ended, which is called a hammer line. The shape of the hanging man is like a dead man hanging on a gallows, which indicates that the market should not be blindly optimistic.

Morphological characteristics:

1. The highest price and closing price of the real body are both at the top of the candle body, the opening price is not far below the highest price, the lower shadow is obviously too long, and the color of the real body (red, green) does not matter.

2. There should be no upper shadow line for the hammer line and hanging man line, but it is allowed to have it. It must be very short. It is generally believed that the lower shadow line should be 2-4 times of the real body.

3. For both, the longer the lower shadow line, the shorter the upper shadow line, and the smaller the real body, the more effective this type of candle line is.

Hanging man: After the market repeatedly went long, the power of buyers and sellers reached a balance. Within a trading day, many parties worked hard to push the price up. After reaching a new high of the day, they had no intention of maintaining the high level. The price fell sharply, and the power of sellers was unstoppable. For many days, The suppressed energy of the seller was released instantly, and the price fell sharply. However, the closing price of the day was still at a high level, close to the highest price, and the real part was quite small. Hanging lines are generally in rising markets, indicating that the market may have reached a peak, and the negative line is more effective than the positive line.

Trading straregy:

1. First of all, you should judge whether it is reliable and whether it is a reversal pattern. It can be analyzed based on the above morphological characteristics, and it is also necessary to observe whether the trend will cooperate with the reversal on the second day. Do not blindly enter the market by building a heavy position. You can build a light position (such as 1/10 position or smaller, etc.) on the same day to test, and pay attention to setting a good stop. Damage position.

2. When the Hanging Man bearish signal is established, one should also carefully check whether it is at the top of the market or a relay indicator. The larger the downward gap between the hanging man's real body and the next day's opening price, the greater the likelihood of a market top.

3. After the top and bottom are formed, there may be a reversal in the market outlook, that is, the price will test the bottom of the hammer line again. As long as it does not break the lowest level, the bottom pattern of the hammer line is still valid.