Hammer candlestick chart pattern formation



What is Hammer candlestick chart pattern formation?

Hammer candlestick chart pattern is formed after an extended down move when the opening and closing price are at or near high of the day and has a long lower shadow. There should be no or very small upper shadow. The colour of the body doesn't matter and it can be either green or red, but if green its considered more bullish.The hammer is of significance only if its formed after a selloff. Hammer’s long lower shadow points at the buying interest near the bottom.

Hammer points towards possibility of bullish reversal happening in the market. Hammer can be a nice support area and usually prices retraces after hammer formation and then resumes its upward journey. Eventhough hammer and hanging man look similar they are differentiated depending upon when they are formed i.e whether after an upmove or down move


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