Bullish Hammer Candlestick Pattern

Bullish Hammer Candle Pattern

So last time we looked at candlesticks and what they mean to us, now we can look at some of the various candlestick patterns and what they mean to our trading when we see them.

So, without further a due, let me introduce to you the hammer pattern.

The hammer has a small upper body with the open and closing price being in the upper third of the entire wick of the candle as shown above with a long tail which is preferably a minimum of 3 times the length of the real body.  It may or may not have an upper shadow but if it does it will be small.  The colour of the real body does not matter.

Now we know how to identify, what do they mean to us? Well first off the tail indicates that there was selling pressure but the sellers were unable keep the price lower and buyers step ion to close the candle at it high and near its open indicating that buyers have won this session and the next move is likely to be a move higher.  So do we care where on our chart we see it? Yes, we do.  The hammer needs to follow a downtrend as it is a reversal candle and it indicates that buyers are now ready to take control and push the price higher.

 As above, the market falls off, we get a hammer and she rallies again.  Please bear in that even though we get a reversal and general bullish move following a hammer what we don not get is a target price.

Points to remember.

• The lower shadow should be at least twice the length of the body.
• The upper shadow is very small or non existent
• It is followed by a downtrend
• The colour of the body does not matter

Hope you enjoy.

The PipMeister.