What is a bullish hammer?

The bullish hammer is a single candlestick formation that appears at the bottom of a bearish trend and indicates that the market sentiment is about to change. This candle pattern is characterized by a small real body (the difference between the opening price and the closing price) and long lower shadows, creating a shape of an inverted hammer.

What is a bullish hammer candlestick pattern?

The bullish hammer candlestick pattern is frequently observed in financial markets and, like many Japanese candlesticks, provides important insight into market momentum. In particular, the bullish hammer can help to validate a chart’s reversal point.

What are bullish hammer and Doji candles?

Bullish Hammer and Doji candles are the two most popular candlestick patterns and are widely used by traders who use technical analysis. Both indicate a potential reversal or continuation of the current trend. The Bullish Hammer is a bearish pattern with a long lower wick and a small real body at the top.

Why is the hammer pattern a bullish reversal signal?

The hammer pattern is interpreted as a bullish reversal signal because it indicates a failed attempt to drive price lower, followed by strong buying action that ultimately determines the candlestick’s appearance.