Hammer

AAA

DEFINITION of 'Hammer'

A price pattern in candlestick charting that occurs when a security trades significantly lower than its opening, but rallies later in the day to close either above or close to its opening price. This pattern forms a hammer-shaped candlestick.

Hammer

INVESTOPEDIA EXPLAINS 'Hammer'

A hammer occurs after a security has been declining, possibly suggesting the market is attempting to determine a bottom.

The signal does not mean bullish investors have taken full control of a security, it simply indicates that the bulls are strengthening.

RELATED TERMS
  1. Bear

    An investor who believes that a particular security or market ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as ...
  3. Bullish Belt Hold

    A trend in candlestick charting that occurs during a downward ...
  4. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  5. Bull

    An investor who thinks the market, a specific security or an ...
  6. Candlestick

    A chart that displays the high, low, opening and closing prices ...
RELATED FAQS
  1. How effective is creating trade entries after spotting a Piercing pattern?

    The piercing pattern candlestick formation is considered by traders and analysts to be a very reliable bullish market reversal ... Read Full Answer >>
  2. How are Shooting Star patterns interpret by analysts and traders?

    The shooting star candlestick formation is commonly interpreted by traders and market analysts as a bearish signal of market ... Read Full Answer >>
  3. What are the most common Bullish patterns used by traders?

    There are several key bullish candlestick patterns that traders commonly use as signals to either enter buy trades or close ... Read Full Answer >>
  4. What is the difference between a Hanging Man and a Hammer Pattern?

    The hanging man and the hammer are both candlestick patterns that indicate trend reversal. The only difference between the ... Read Full Answer >>
  5. How do I Implement a forex strategy when spotting a Morning Star pattern?

    A forex trader can implement a low-risk trading strategy designed to take advantage of a possible bullish market reversal ... Read Full Answer >>
  6. How do I build a profitable strategy when spotting a Morning Star pattern?

    Traders have a couple of options for designing a trading strategy that takes advantage of a morning star candlestick pattern, ... Read Full Answer >>
  7. How do I build a profitable strategy when spotting a Hammer pattern?

    When trading a hammer candlestick pattern, consider a number of factors before entry, including the placement of the pattern ... Read Full Answer >>
  8. How are Hammer patterns interpreted by analysts and traders?

    The hammer is a common candlestick pattern that signals the reversal of a bearish trend. It comprises a single candlestick ... Read Full Answer >>
  9. How effective is creating trade entries after spotting a Hammer pattern?

    The hammer, like its bearish counterpart the hanging man, can be a powerful reversal signal under the right circumstances. ... Read Full Answer >>
  10. How do I build a profitable strategy when spotting an Evening Star pattern?

    A trader can seek to take advantage of the evening star candlestick pattern, interpreted as a signal of a bearish market ... Read Full Answer >>
Related Articles
  1. Active Trading

    Tales From The Trenches: Location Is Everything

    When a candle pattern re-occurs near a moving average, it may indicate future support or resistance.
  2. Charts & Patterns

    The Basic Language Of Candlestick Charting

    If you want to use candlestick charting to get a sense of where a stock is headed, you need to learn how to read this unique charting language.
  3. Charts & Patterns

    Candlestick Charting: What Is It?

    Discover the components and basic patterns of this ancient technical analysis technique.
  4. Forex Education

    Tweezers Provide Short-Term Precision For Forex Traders

    Precise and short, the tweezer setup is similar to the more popular double top/bottom formations.
  5. Forex Education

    Candlestick Charting: Perfecting The Art

    Take a look at continuation patterns and how they can confirm or deny trends.
  6. Charts & Patterns

    Candlesticks Light The Way To Logical Trading

    Crowd psychology is the reason this technique works. Find out how to make it work for you.
  7. Active Trading

    Candle Sheds More Light Than The MACD

    Read the case against this well-established indicator.
  8. Mutual Funds & ETFs

    How To Apply Technical Indicators To Mutual Funds

    Mutual funds do not readily lend themselves to technical analysis, but investors can use common indicators to evaluate mutual funds as easily as stocks.
  9. Stock Analysis

    A Trader's Look at the S&P 500

    Moving averages are sending an important signal, and it's probably not what you think.
  10. Chart Advisor

    Is Now the Time to Invest in North America?

    Bullish chart patterns across the North American markets suggest that now might actually be a wise time to allocate closer to home.

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center