What does hammer candlestick mean in a downtrend?

Hammer candlestick in a downtrend generally occurs after a sharp fall. It can also occur after a gradual fall but chances of Hammer occurring after a sharp fall are more due to the nature of the market. Hammer candlestick after a prevalent downtrend can mean two things, it can mean a reversal into an uptrend.

What is a green Hammer candle?

A green hammer candle, however, is slightly more bullish compared to a red hammer candle. Hammer Candlestick in Uptrend : These are the once to trade. Hammer candlestick in uptrend generally occurs at the end of a retracement and it can be an important clue of a possible continuation of the original uptrend.

Can you use hammer candle as a support level?

Hammer occurring along with a spinning top or even multiple hammers together also increases the chance of hammer to work. While using hammer candle as support level, one should be using the bottom of the wick and not the real body of the candle. There are 3 main limitations of using Hammer candlestick pattern.

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.