Hammer
BullishReliability: MediumAlso called · bullish hammer, hammer candle, hammer candlestick
A long lower wick with a small body at the top. At a low, it signals a bounce.
How to spot it
- The lower wick is at least twice the body
- There is almost no upper wick
- It appears at the end of a downtrend
Why this shape forms
Price was driven well below the open and bought back before the close. Someone absorbed the supply that came out down there.
Where it actually means something
It has to come after a decline. The identical shape during a rally is not a hammer.
What else to check
Watch whether the next candle trades above the hammer body. Acting on the hammer alone gets you wrong often.
This means you're wrong
The signal dies if the next candle breaks the hammer's low.
The mistake beginners make
Reading a hammer in the middle of an uptrend as a bounce signal. Location decides the meaning.
Easy to confuse with
The same shape with a long upper wick is a hanging man, and at the top of a rally it means the opposite. Location decides the name.
Real examples from the community
Patterns are probabilistic tendencies, not guarantees. This is not investment advice.