Hammer

Hammer is a candlestick pattern that signals a potential reversal in a downtrend. into uptrend and it is formed at the bottom of the trend characteristics:

1. Appearance:

• Small real body (either green or red).

• Long lower shadow (at least twice the size of the real body).

• Little to no upper shadow.

2. Location in Trend:

• Appears after a downtrend.

• Indicates potential reversal to the upside.

3. Market Psychology:

• Sellers push the price lower, but buyers regain control and push it back up.

• Shows rejection of lower prices and potential trend reversal.

4. Confirmation:

• Needs a bullish confirmation candle (a strong green candle closing above the hammer).

• Higher volume strengthens reliability.