The Hammer candlestick is a type of Japanese candlestick pattern used in technical analysis to identify potential bullish reversals in price action. It is a single candlestick pattern that consists of a small body near the top of the candlestick with a long lower shadow and little to no upper shadow.
The long lower shadow of the
Hammer candlestick represents buying pressure and suggests that bears were able
to push the price down during the trading period, but bulls were able to bring
the price back up and close it near the opening level. This indicates that
buyers are stepping in and that a potential bullish reversal may be imminent.
However, it's important to note
that the Hammer candlestick should be confirmed by other technical indicators
and analysis to confirm a bullish trend reversal.
what is a hammer candlestick
pattern
A Hammer candlestick pattern is a
type of bullish reversal pattern in technical analysis. It is formed when a
candlestick has a small real body (or no real body) at the top with a long
lower shadow and little to no upper shadow.
The pattern indicates that the
bears pushed the price down during the trading period, but the bulls were able
to regain control and push the price back up to close near the opening level.
The long lower shadow shows the buying pressure and suggests a potential
bullish reversal.
However, to confirm the validity
of the Hammer pattern, traders often look for other technical indicators and
analysis such as volume, trend lines, and other chart patterns to confirm the
bullish sentiment. Additionally, the pattern can be more significant if it
occurs after a downtrend, indicating a potential trend reversal.
