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The hammer pattern

The Hammer candlestick pattern is a bullish reversal pattern that indicates a possible change in price direction. It typically forms at the end of a downtrend and signals the possibility of an uptrend beginning. It is called "Hammer" because of its shape, which resembles a hammer with a long handle and a small head.

👀 What the Pattern Looks Like:

The Hammer pattern is formed by a single candle, which has the following characteristics:

Small Body: The body of the candle, which is the difference between the opening and closing prices, should be small. This body can be red (bearish) or green (bullish).

Long Lower Shadow: The most distinctive feature of a Hammer is its long lower shadow (wick). This shadow should be at least twice the length of the real body.

Little or No Top Shadow: Ideally, a Hammer should have little or no top shadow. If there is a little top shadow, it can still be considered a Hammer, but the absence of a top shadow is more ideal.

Position within a Trend: To be considered a Hammer, it must form after a downtrend. If the same shape appears after an uptrend, it is called "Hanging Man" and may be bearish.