Hammer
19 hours agoA Hammer is a specific Japanese candlestick pattern. It can be either black or white and features a small body positioned near the high, with little to no upper shadow and a long lower shadow (or tail).
This candlestick is regarded as a bullish pattern when it appears during a downtrend. In essence, the Hammer candlestick emerges in a downtrend, showcasing a long lower shadow and a small real body at the top of the price range. This pattern may indicate that the price is forming a bottom and is likely to reverse upward.
For a Hammer candlestick pattern to be valid, it must satisfy the following criteria:
- The candle should have either a very short upper shadow or none at all.
- The lower shadow must be significantly long, at least twice the height of the body.
- The candle must occur after a distinct downtrend.
- The body should be positioned at the upper end of the trading range.
- The color of the body is not crucial (although a white candle may suggest a stronger bullish sentiment).
- The following day should confirm the pattern, with the price trading above the Hammer's body.
It is important not to confuse the Hammer with the Hanging Man. While they appear similar, the Hanging Man forms at the end of an uptrend, whereas the Hammer appears after a downtrend.
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