Hammer
Also known as: Hammer candle
A small body on top with a long lower wick, after a downtrend. Buyers bought back a sell-off – a bullish reversal signal.
What it looks like
The lower wick is at least about twice the body, the upper wick is nearly absent. The body's color is secondary.
What it means
Sellers pushed price down, but buyers pulled it back by the close – a sign that downward pressure is fading.
How it is traded
Entry usually after a confirming green follow-up candle; stop below the hammer's low.
Where & when – and the limits
Only a reversal signal after a downtrend. The same shape at the end of an uptrend is the bearish Hanging Man – context decides.
Related patterns
Education, not investment advice. Candlestick patterns are hints, not guarantees – they need confirmation and context (trend, levels, volume). Always manage risk with stop-loss and position size.
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