What is the Hammer Candlestick Pattern?
Hammer is a Forex bullish candlestick that forms at the end of a downtrend and turns it into an uptrend. (bullish = buying/or going up. And because it changes the direction of the trend, therefore it is called a “reversal” candlestick).
How does Hammer Candlestick look like?
Hammer candlesticks usually have very long lower wick (AKA shadow or tail) and a very short upper wick (or no upper wick at all.)
The color of the Hammer candlestick is not really important, it can be red or blue.
Where does Hammer Candlestick appear?
It appears at the end of a downtrend (market heading down) and changes it to an upper trend.
What should I do when I see a Hammer Candlestick Pattern?
Most traders consider Hammer Candlesticks a big buying signal, they are apparently right, but the more experienced traders would advise you to look for more signals before entering your trade.
You can’t depend on one signal, you have to trade in in the direction of the trend, not against it. Plus wait for other signals to buy, Fibonacci retracement, moving average, hitting a support level etc.
And of course, never judge the candle during its formation, wait patiently till the candle closes and you will then know for sure what kind of candlestick it is and what it means to your trading experience.