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• Hammer Reversal Candle

Hammer Definition:
A Hammer candlestick is formed when the price moves lower after the open, and then comes back to close above the intraday low and near the open.

This candlestick typically has a small real body (regardless of color) with a lower shadow that is at least two times the measure of the real body.

Background:
A classic Hammer has little to no upper shadow. Conversely, if this candlestick is formed after an up leg, it is considered a Hanging Man candlestick.

Practical Use:
Technical analysts often use Hammers as the beginning of buy signals especially when in context of another tradable buy pattern.

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Chart Examples

Hammertime