Hanging Man

Bearish Reversal Pattern

The hanging man is a bearish reversal candlestick. Most bearish reversal patterns this pattern will

-occur within an uptrend or at the top of a trend
-Often it is followed by a confirmation candle.

Remember with bullish reversal candlesticks, these are warning sign of a possible change in trend, but it is not a signal. Traders normally wait for confirmation of a change of trend on the next candle.

Formation:

The formation of the hanging man , very similar to a hammer, this is created when the opening, closing and low prices on a candlestick are in the same area. The hanging man will have a long downward shadow. Normally the shadow is 2 to 3 times the size of the body. The main difference between the hammer and the hanging man is that the hammer occurs at the bottom of the trend and it is a bullish reversal pattern, instead the hanging man occurs at the top of a trend and it is a bearish reversal pattern.

The hanging man is created because the moment we get to an overbought level or a resistance point where the bears are strong, they stop the prices from moving any higher. On the next candle the bears actually push the prices lower. This shows a change in strength and the bears pushing prices back down.

The hanging man is not as strong reversal pattern as the shooting star.

A hanging man is often applied to many price action spread betting strategies. Below is a spread betting example of the hanging man.

How to trade the hanging man?

Below is a Forex Spreadbetting example of the hammer in GBPUSD. As you can see the bulls were in control, pushing prices higher until they met resistance. In the hammer the bears pushed the prices lower but the bulls were able to give a last push higher, forming the hanging man. On the next candle the bears took control and pushed prices lower.

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FTSE 100 price action scalping

Time frame: 5 Min / 1 min

FTSE 100

Indicators used / Settings: none / Price Action

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Entry Rules:

This is a very simple strategy that uses no indicators only price action based on candlestick patterns. I use this scalping strategy on the FTSE 100 trading. It requires a lot of patience but is a very effective trading strategy. Wait for shooting star or a hammer to form then enter on the open of the next bar.

In the Pictures below the blue circles indicate YES TRADE . The red circles are NO TRADE.

Spreadbetting long:

Spread bet long when a hammer forms near the current lows. In the first example you can see this spread betting scalping strategy applied in the first and second blue circles.

Do not trade when the hammer forms while the prices are moving higher. The example in the second picture below, the third red circle is a failed hammer as it occurs within an up trend.

Spread-betting short:

When to short the FTSE100? when a shooting star forms near the current highs. The signal is stronger if the shooting star forms at a resistance level. Furthermore the longer the shadow, the stronger the signal. In the second spreadbetting example below(pic2), the body of the shooting star is relatively small to it’s shadow(first and third blue circle) – this is a strong signal and one to trade. The second circle (red) you can see the shadow is not that long compared to the body. This is a riskier trade, and don’t suggest to take.

Exit Rules:

This is a Spread betting scalping strategy, so to take 5 max 10 points out of the market. Your stoploss above / below the low or high of the shadow.

When it works best?

After a rally or a decline and approaching support or resistance

Here is a spread betting example of this FTSE 100 price action scalping strategy

Spread betting example 1

Spread betting example 2

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Bulls and Bears

Bulls are when buyers are in control driving up the stock market

Bears are when sellers are in control driving down the stock market

Bull Market and Bear Market

Bull market describes a longer term trend of the stock market, when the Bulls are in control over a longer period of time

Bear market are when sellers are in control driving down the stock market

Where did Bulls and Bears get their name from?

The actual origins of these expressions are unclear. Here are two of the most frequent explanations given:
The terms “bear” and “bull” are thought to derive from the way in which each animal attacks its opponents. That is, a bull will thrust its horns up into the air, while a bear will swipe down. These actions were then related metaphorically to the movement of a market: if the trend was up, it was considered a bull market; if the trend was down, it was a bear market.

Historically, the middlemen of bearskins would sell skins they did not own yet. This was an early form of speculating on the future price of these skins . The trappers would profit from a spread – the difference between the cost price and the selling price. These middlemen became known as “bears”, short for bearskin jobbers. The term stuck for describing a downturn in the market

On the other hand, because bears and bulls were widely considered to be opposites, due to the bull-and-bear fights, the term bull stands as the opposite of bears.

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Shooting Star

Bearish Reversal Pattern

What is a Shooting Star?

The shooting star is a bearish reversal candlestick. Most bearish reversal patterns this pattern will

-occur within an uptrend or at the top of a trend
-Often it is followed by a confirmation candle.

Be aware with bullish reversal candlesticks this is a warning sign of a possible change in trend, but it is not a signal. Traders normally look for confirmation of a change of trend on the next candle.

Formation:

A shooting star is created when the opening, closing and low prices on a candlestick are in the same area. The shooting star will have a long upward shadow. Normally the shadow is 2 to 3 times the size of the body. The whole theory behind this is that prices have been moving higher until they reach a high point or a resistance. They try move higher but the sellers come in and push the prices all the way back down to the opening price. This shows the strength in the sellers.

A strong pattern shooting star is formed when the closing price is in line with the opening price or is lower than the opening price.

Shooting stars are often applied in many price action spread betting strategies. Below is a spread betting example of the shooting star.

Here is an example of the shooting star applied in a scalping spread betting strategy on the FTSE.

How to trade the shooting star?

Below is a spread betting example of a shooting star in GSK.L

As you can see in this strategy the prices were moving in an uptrend, until prices reached a new high. At this high, a lot of selling pressure comes into the market that pushes the prices way below the opening price of the candle. The next day is dominated by sellers again that the prices close near their lows on a very strong bearish candle. The Bulls try another attempt but are unable to push higher the following day. The shooting star is the first candle that marks a change in trend.

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Alligator Scalping system

Alligator Scalping Strategy

Time frame: 5 Min

Tag: GBPUSD

Indicators used / Settings:

Exponential moving averages

Yellow:	Pink:
Ema 3 Ema 5 Ema 7 Ema 9 Ema 11 Ema 13	Ema 21 Ema 24 Ema 27 Ema 30 Ema 33 Ema 36

Ema 55 Color Red

Possible other spread betting charts:

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Spread Betting Example

Entry Rules:

When the yellow bands cross the pink bands this is your entry signal. I will present this strategy in two ways, for those that are risk averse and for those that don’t mind risk.

Spread-betting long:

Trade Long when the yellow bands cross the pink bands to the upside. The cross over of the bands should occur above the 55 EMA line.
Risk averse: The above strategy could lead to some false entries as you can see in the second diagram. For those spread betters that are risk averse, trade the rebound: After prices have broken to the upside, wait for the retracement, that is prices to come back down into the pink bands then trade long.

Spread-betting short:

Spread betting short is the opposite. Trade short when the yellow bands cross the pink bands to the downside. The cross over of the bands should occur below the 55 EMA line. for those risk averse

Exit Rules:

This is a scalping strategy, therefore keep to your money management rules.
on GBPUSD: use a target of 5-10 points and a stop loss of about 15 points. These targets could change according to what you are trading, You should determine your money management rules.

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*best time for this strategy is on the European open or after a move has started.

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Here is a spread betting example of the Alligator Scalping system strategy on GBP USD

Arrows indicate entries. the risk averse spread betters would only scalp the yellow arrows.

Here is an example of the disadvantage of this system. you might get false break outs. A risk averse trader will avoid these false breakouts, as he trades only the retracements (indicated above by the yellow arrows).

Below the spread betting example shows various entries. and the red arrow is the trader being stopped out.

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Retracement

What is retracement?

Retracement is when prices have moved in a direction either up or down, then they retrace the move.

Below is a spread betting example of a retracement. Prices retraced the original move then continued in the direction of the main trend down