What the Pattern Looks Like
The Hammer candlestick pattern is a helpful signal in trading, especially for spotting a possible trend reversal after a price drop. It usually forms at the bottom of a downtrend and has a small body with a long lower shadow, looking like a hammer. This shape shows that sellers pushed the price down, but buyers came in strong and pushed it back up, showing signs of a potential price increase.
When traders see a Hammer pattern, it can mean that the downtrend is losing strength and buyers might take control. However, it’s important not to rely only on the Hammer pattern. It works best when used with other technical tools like support and resistance levels, moving averages, or RSI indicators. Volume confirmation also adds strength to the signal — if the Hammer appears with high trading volume, it’s more trustworthy.
In short, the Hammer pattern can be a strong sign of a possible bullish reversal, but it’s not 100% reliable on its own. Successful traders always combine multiple signals to make better decisions. Always confirm before entering a trade.