I think confirmation is not as easy as one or two candles after...

  1. 3,290 Posts.
    I think confirmation is not as easy as one or two candles after the event. But mostly it suffices and what you mentioned are the textbook examples of confirmation. But a lot of the time it comes down to the surrounding landscape as opposed to that one hill. So a hammer in an overall bearish chart would have a lot less impact than a hammer in a bullish chart. One could lead to a brief rally by the bulls and subsequent failure with the bears gaining control. The other could be a major rally and price retrace with the bulls gaining and remaining in control of the battlefield. Look around Ateball and look for the signals that tell you if in fact we are standing on bearish ground or bullish ground. That in itself is great confirmation of not just the battle but how the war is going.

    Take today's action as an example. If you were a charting man. And most importantly you had confidence in your charts. You might have taken a position on that gap filling. Not due specifically to the possibility of the morning star. But solely on the price action when the gap was filled. So as not to spook the herd you may well have loaded up on 3 or 4 parcels to keep the price at bay. Of course that type of strategy would only be possible if you interpreted the battle field as bullish and less hostile than the herd perceived it. Your confirmation would therefore not be on the hammer. It would in fact be the hammer.

 
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