The London Hammer: What Traders Can Learn from This Ancient-Looking Mystery
How a Misunderstood Hammer in a Rock Can Teach You to Read Charts Better
Ever heard of the London Hammer?
It’s actually not a chart pattern or a setup… (Heck, it’s not even in London, UK.)
It’s actually a real hammer, found encased in rock, in a place called London, Texas.
Huh?
Yep, and when people found it, they assumed that because the rock looked like 100+ million-year-old rock, the hammer must have been just as ancient.
Clearly then, we were building sheds while T-Rex was still chasing its first meal… So much for everything Miss Jenkins taught us about History in Year 4.
Not so fast…
LONDON HAMMER
On face value, it looked reasonably legit… Hammer encased in what looks like Cretaceous rock (ie rock from over 100 million years ago.)
A prehistoric hammer.
Ah, but when you zoom out and look at the bigger picture
- The hammer itself looks like something they used in the 1800s.
- And the “rock” is likely just minerals hardening around it over time.
So it’s probably not a prehistoric hammer at all.
It’s just… erm, a normal old hammer, in a normal old rock.
And that, ladies and gentlemen, is a lesson for us as traders.
Because charts do the same thing.
You see a lovely bull flag.
Big pole. Tight flag. Clean levels.
Yum, let’s get ready to buy this….
But then you step back and realise:
- It’s smack in the middle of a 3-day range.
- There’s CPI or FOMC around the corner.
- Liquidity’s thin. Volume’s low.
All variables suggest that this isn’t really the flag you want.
But, just like the London Hammer, you needed to step back and look at all the evidence to make a clear judgment.
At a glance, it looks like one thing… but with all the context, it’s another.
Hammer in a rock ≠ ancient human tool
Clean flag setup ≠ automatic trade
Take your time, check the context, then make the call…