What Is Hammer Candlestick?
A Hammer candle has a small real body (open and close near each other), a long lower wick (typically 2x the body or longer), and little to no upper wick. It appears after a decline and signals potential bullish reversal — sellers pushed price down, but buyers rejected the lows and closed near the high.
The pattern works because the long lower wick shows the market tested lower prices and found aggressive buying interest. The longer the lower wick relative to the body, the stronger the signal.
The color of the hammer (green or red body) matters less than its shape. A green hammer is slightly more bullish, but red hammers also work.
Inverted Hammer is the same shape flipped — long upper wick, small body — appearing at the bottom of declines. Also bullish but typically weaker than a regular hammer.
Reality check: Always wait for confirmation from the next candle. A hammer followed by a strong green candle is reliable; a hammer followed by another decline failed.
Related terms
- Doji Candlestick — A candlestick where open and close are nearly equal — indicates indecision in the market.
- Engulfing Pattern — A two-candle reversal pattern where the second candle fully engulfs the first.