- DAX – WKN: 846900 – ISIN: DE0008469008 – Price: 12.783.77 Pkt (XETRA)
The hammer candle is one of the best known Formations of candlesticks. A hammer candle is defined as occurring in a downtrend or at the end of a downtrend and is characterized by a long downward wick. The body of the candle, which is defined by the opening and closing prices, is small compared to the lower wick and is located at the top of the candle.
A hammer candle means: the price fell sharply in the course of trading, but then recovered significantly and the closing price was close to the opening price.
A hammer candle is interpreted as a short-term reversal signal in the downtrend. Ideally, prices will rise again after the hammer candle. The hammer candle represents the downside exaggeration, which is subsequently corrected again.
The DAX shows a hammer candle in the daily chart today as per the textbook. In trading on Xetra, the DAX fell to 12,618.68 points, but then recovered strongly and ended trading with a price close to the opening price at a significantly higher level.
How significant is a hammer candle in the DAX? Thomas N. Bulkowski, who has statistically reviewed numerous candle patterns and other technical analysis formations, states on his website thepatternsite.com that there is a 60% chance that the price will rise again, at least in the short term, after a candle. hammer . However, Bulkowski didn’t look at the DAX, but thousands of individual titles.
Other tech chart arguments may currently speak in favor of a possible DAX recovery:
- The DAX has ripped a large price gap with falling prices, because there is a big gap between today and yesterday’s candle.
- With today’s price drop, the DAX has fallen close to its March lows. Ideally, a double bottom could form consisting of the March lows and the current low.
Of course, none of this is a guarantee that the price will recover in the short term. The price can also continue to drop like a stone. But there may be a slightly higher probability of a short-term countermovement, at least according to technical chart theory.
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