Hammer
A bullish reversal candle with a small body near the high and a long lower wick showing rejection of lower prices.
BullishReversalMedium reliability
wickrejectionbottomlower shadow
Definition
- Single candle.
- Small real body near the high of the candle.
- Long lower wick (often 2–3× the body).
- Little to no upper wick.
Market Psychology
- Sellers push price down.
- Buyers step in aggressively, rejecting lows and closing near the highs.
- Often a “defense” candle at support.
Rules
- Best after a downtrend or selloff into support.
- Lower wick should stand out versus recent candles.
- Body near the top third of the candle range is ideal.
Best Context
- After a dump into support.
- At the bottom of a range.
- After a liquidity sweep below recent lows.
Confirmation Ideas
- Next candle closes above the hammer high or midpoint.
- Confluence at support (prior low, demand zone).
- Follow-through buying / reclaim of a key level.
Invalidations
- Price breaks and holds below the hammer low.
- Immediate failure and close back under support.
Common Mistakes
- Buying hammers in the middle of nowhere.
- Ignoring bigger-trend conditions.
- Entering without waiting for confirmation when volatility is high.