Hammer

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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

BREAKING DOWN '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.

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RELATED FAQS
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    The piercing pattern candlestick formation is considered by traders and analysts to be a very reliable bullish market reversal ... Read Full Answer >>
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    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 >>

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