Bullish Hammer Candlestick
· Direction: Bullish
· Type: Reversal
· Reliability: Moderate
The Hammer candlestick formation is a significant bullish reversal candlestick pattern that mainly occurs at the bottom of downtrends. Strength and Confirmation
The strength of a Hammer formation depends on where it appears. If a hammer forms near support levels, then the likelihood of a strong bullish reversal is high. However, if the hammer forms in the middle of a trading range it tends to have little significance. In ideal conditions traders want the wick length to be several times longer than the body of the candle. The longer the candle, the more buyers were able to drive price back up and the stronger the bullish signal this candle provides.
The bullish Dragonfly Doji serves as a stronger buy signal than the Hanging Man pattern. Since a Dragonfly candle reflects more uncertainly and lack of direction, candlestick analysts will usually take it as a stronger buy signal.
Hammer vs. Hanging Man
Alone, Hammer and Hanging Man candles look identical. If the market had been trending up for a while the formation is a Hanging Man. Hammers follow a bearish trending market.
Although traders will usually wait for confirmation the next day, look for buying opportunities to come.
The strength of a Hammer formation depends on where it appears. If a hammer forms near support levels, then the likelihood of a strong bullish reversal is high. However, if the hammer forms in the middle of a trading range it tends to have little significance. In ideal conditions traders want the wick length to be several times longer than the body of the candle. The longer the candle, the more buyers were able to drive price back up and the stronger the bullish signal this candle provides.
The bullish Dragonfly Doji serves as a stronger buy signal than the Hanging Man pattern. Since a Dragonfly candle reflects more uncertainly and lack of direction, candlestick analysts will usually take it as a stronger buy signal.
Hammer vs. Hanging Man
Alone, Hammer and Hanging Man candles look identical. If the market had been trending up for a while the formation is a Hanging Man. Hammers follow a bearish trending market.
Although traders will usually wait for confirmation the next day, look for buying opportunities to come.
Hammer Candlestick Chart Example
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