Hammer Candlestick Definition, Formation, & Interpretation
As a herald of potential bullish reversals, the hammer candlestick possesses immense significance in market analysis. The bullish view is further strengthened if the hammer pattern receives confirmation on the next candles. An upside gap or long bullish candle following the Hammer indicates follow-through buying pressure. Pay close attention when this pattern forms at support or resistance levels as the hammer signals potential exhaustion of the current trend and the start of a new one. Multiple candlestick patterns are often confused with the hammer candlestick pattern. It’s essential to understand the differences when using candlestick pattern technical analysis. The hammer candlestick appears at the bottom of a down trend and signals a bullish reversal. The hammer candle has a small body, little to no upper wick,...