What is a hammer candle?

A hammer candle is only a signal that indicates there is a possibility of a trend reversal and does not guarantee that the reversal will happen. Thus, traders are advised to understand the limitations of the hammer candlestick.

What is a hanging man candle?

A hanging man candle is similar to a hammer but indicates a bearish reversal. Moreover, unlike a hammer, it appears mainly at the end of an uptrend. Hammer candlestick pattern refers to a candlestick pattern with the appearance of a hammer or the English alphabet’s ‘T.’ It helps traders identify potential bullish trend reversals.

How to identify hammer candlestick?

Identification of hammer – The first step is to be able to identify the red or green hammer candlestick as given in the description above. The color of the hammer green or red, indicating a bullish or bearish pattern. Confirmation – It should be identified with the context of the trend in prices.

What is an inverted hammer candlestick pattern?

Like the Hammer, an Inverted Hammer candlestick pattern is also bullish. The Inverted formation differs in that there is a long upper shadow, whereas the Hammer has a long lower shadow. The Inverted Hammer candlestick formation typically occurs at the bottom of a downtrend. It can act as a warning of a potential reversal upward.