I still remember the first time I spotted it.
I was deep in losses, staring at a bloody downtrend, thinking it was over.
Then, there it was — a tiny candle with a small body, a long tail below… and a whole lot of hope.
That candle is called the Hammer Candle.
And for every beginner trader out there, you NEED to know this.
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The Hammer Candle:
Appears after a downtrend
Small body, long lower wick (the "handle" of the hammer)
It tells you: "Buyers are fighting back. The fall might be over."
But that’s not all.
Right after the hammer, if you spot two strong green candles forming, it's called an Engulfing Pattern.
Why?
Because they completely engulf the red candle before them — overpowering the selling pressure.
The secret is in the details:
The red candle before the engulfing has small wicks and a bigger body.
The green engulfing candles are bold, powerful, and decisive.
Together, they scream: "Reversal incoming!"
Important:
In a downtrend, the hammer is green.
In an uptrend (if you're spotting a top), the hammer could be red — colors switch based on direction!
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Moral of the Story:
These candles are confirmation candles.
They’re like green lights on the trading highway, telling you:
"It’s safe to go in... for now."
Tip: Always wait for confirmation. A hammer alone is powerful — but the engulfing candles make it bulletproof.