Inverted K-Line Detailed Explanation: Hammer Line and Hanging Line

These types of reversal candlesticks can indicate bullish or bearish trends. If they appear in a downtrend, they signal that the downtrend is about to end, known as the Hammer Line, meaning 'the market is pounding the bottom with a hammer'; if they appear in an uptrend, they indicate that the upward movement may have ended, known as the Hanging Line, whose shape resembles a dead person hanging on a gallows, warning that the market should not be blindly optimistic.

Shape Characteristics:

1. The highest price and closing price of the body are both at the top of the candle body, and the opening price is not far below the highest price, with a noticeably long lower shadow, and the color of the body (red or green) is irrelevant.

2. The Hammer Line and the Hanging Line should ideally have no upper shadow, but a very short one is allowed; it is generally considered that the lower shadow should be 2 to 4 times the body.

3. For both, the longer the lower shadow, the shorter the upper shadow, and the smaller the body, the more effective the candlestick line is.

Hanging Line: After repeated bullish attempts, the forces of buyers and sellers reach a balance. Within a trading day, the bulls push the price up to create a new high for the day, but without the intention of maintaining the high position, the price then drops significantly as the selling pressure becomes overwhelming. The energy suppressed for many days by sellers is suddenly released, causing the price to plummet, but the closing price of the day remains at a relatively high position, close to the highest price, forming a very small body. The Hanging Line generally occurs in an uptrend, indicating that the market may have reached a peak, with the effect of a bearish line being better than that of a bullish line.

Trading Strategy:

1. First, determine whether it is reliable and whether it is a reversal pattern. This can be analyzed based on the shape characteristics mentioned above, and it is also necessary to observe whether the trend on the second day aligns with the reversal. One should not blindly open a heavy position; a light position (such as 1/10 of the full position or smaller) can be tested, with a proper stop-loss set.

2. The confirmation of the bearish signal of the Hanging Line should also be cautious about whether it is at the market peak or a continuation indicator. The larger the downward gap between the body of the Hanging Line and the opening price of the following day, the greater the likelihood that a market peak has formed.

3. After forming a top and a bottom, there may be a rebound in the future market, meaning the price may test the bottom of the Hammer Line again. As long as the lowest point is not broken, the bottoming pattern of the Hammer Line remains valid. #bnb创历史新高