What is a hammer candlestick pattern?

A hammer candlestick is a technical trading pattern that resembles a “T” whereby the price trend of a security will fall below its opening price, illustrating a long lower shadow, and then consequently reverse and close near its opening. Hammer candlestick patterns occur after a downtrend. They are often considered signals for a reversal pattern.

What are the bearish variations of Hammer candles?

The bearish variations of hammer candles include the hanging man and the shooting star, which occur after an uptrend. The hammer candlestick is a pattern that works well with various financial markets. It is one of the most popular candlestick patterns traders use to gauge the probability of outcomes when looking at price movement.

Is a red hammer a bullish Candlestick?

When the high and the close are the same, a bullish Hammer candlestick is formed. In contrast, when the open and high are the same, the red Hammer formation is considered less bullish, but still bullish. If the Hammer is green, it is considered a stronger formation than a red hammer because the bulls were able to reject the bears completely.

What is a hammer reversal candle?

Unsourced material may be challenged and removed. A hammer is a type of bullish reversal candlestick pattern, made up of just one candle, found in price charts of financial assets. The candle looks like a hammer, as it has a long lower wick and a short body at the top of the candlestick with little or no upper wick.