Hammer Is The Bullish Reversal Candelstick Pattern. It is Made Up of a Single Candelstick.
Usually , A Hammer Candelstick appears at the end of the Downtrend
Hammer is one of the strong bullish Reversal Candelstick pattern.
The real body of this candel is small and is located at the Top with a lower shadow which is more than twice the real body.
This Candelstick chart pattern has no or little upar shadow.
The Psychology behind this candel formation is that the prices opened and sellers pushed down the Price,
Suddenly the buyers came into the market and pushed the prices up and closed the trading session more than the opening price.
The resulted in the formation of bullish pattern and signifies that Buyers are back in the Market and downtrend may end.
Trades can enter a long position if next day Bullish candel is formed and can place a stop-loss at the low of Hammer Candel.
Important Points
1. The previous trend should be downtrend.
2. The Lower Shadow is at least twice as big as the real body.
3. The real body can be green or red ( Better if it is Green).
4. The Volume of the Hammer Candel should be higher than its previous 2 candels.
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