- buy order
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- bullish tweezers bottom candlestick
- bullish tri star candlestick
- bullish three white soldiers candlestick
- bullish three stars in the south candlestick
- bullish three outside up candlestick
- bullish three line strike candlestick
- bullish three inside up candlestick
- bullish stick sandwich candlestick
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- bullish morning star candlestick
- bullish morning doji star candlestick
- bullish ladder bottom candlestick
- bullish inverted hammer candlestick
- bullish harami candlestick
- bullish hammer candlestick
- bullish gravestone doji candlestick
- bullish engulfing pattern
- bullish dragonfly doji candlestick
- bullish doji star candlestick
- bullish divergence
- bullish breakaway candlestick
- Bullish Belt Hold
- bullish abandoned baby candlestick
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- bid/ask spread
- bearish tweezers top candlestick
- bearish tri stars candlestick
- bearish thrusting candlestick
- bearish three outside down candlestick
- bearish three line strike candlestick
- bearish three inside down candlestick
- bearish shooting star candlestick
- Bearish Reversal Candlestick Patterns
- bearish meeting lines candlestick
- Bearish In-Neck On-Neck Thrusting Continuation Patterns
- bearish harami cross
- bearish harami candlestick
- bearish hanging man candlestick
- bearish gravestone doji candlestick
- bearish falling three methods candlestick
- bearish evening star candlestick
- bearish evening doji star candlestick
- bearish dragonfly doji candlestick
- bearish downside tasuki gap candlestick
- bearish doji star candlestick
- bearish deliberation candlestick
- bearish dark cloud cover candlestick
- bearish breakaway candlestick
- bearish belt hold candlestick
- bearish advance block
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• Direction: Bullish
• Type: Reversal
• Reliability: Moderate
• After an established downtrend
• Hammer candles have a small real body that forms at the upper end of the days trading range
• The candle can be either blue or red, analyst usually do not differentiate.
• Lower wick at least twice as long as the real body
• No (or almost no) upper wick
After a bearish sell-off a significant rally brings price back up creating a long bottom wick. By day end buyers are able to push prices back to the upper range creating a short body.
The Hammer pattern signifies a weakening in bearish sentiment. The long lower wick signifies an initial continuation of the downtrend. However, renewed buying sentiment acts as support and drives the price higher to close near its opening price.
• 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.
Although above we state that most analysts do not care if the small candle is red or blue, traders will actually take a blue candle to suggest a stronger bullish signal. Buyers being unable to bring the close price above the open price suggest additional bullish strength. Generally the difference between blue and red candles is minimal.
The bullish Dragonfly Doji serves as a stronger buy signal than the Hanging Man pattern. Since a Dragonfly candle (where open and close are identical, but we see a low similar in length to the Hanging Man) 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. Their difference lies in what type of trend the candle follows. If the market had been trending up for a while the formation is a Hanging Man. In fact the name, Hanging Man, suggest price is hanging over a precipice, ready for a fall. Hammers follow a bearish trending market and its name suggest price has already been weighted down.
Although traders will usually wait for confirmation the next day, look for buying opportunities to come.