Hammer candle (reversal)
It is a price candle with a short body and a long lower shadow. The candle body should be two or three times smaller than the length of the lower shadow.
The hammer candle comes at the end of a downtrend and is a signal of a reversal to an upward trend, as it indicates that the selling forces have ended by recording the lowest level, and the buying forces have increased again to push the price up to close at a high level far from the lowest level recorded. It is preferable to wait for confirmation of the price movement reversing to an upward trend after the hammer candle.
Inverted hammer candle (reversal)
It is similar to the hammer candle pattern, but the difference is that the shape of the candle is reversed, where the shadow of the candle is upper. The inverted hammer candle comes at the end of a downtrend and is a signal to reverse the trend to an uptrend. It is preferable to wait for confirmation of the price movement reversing to an uptrend after the inverted hammer candle.
Hanging Man Candlestick (Reversal)
It is a candle identical to the hammer candle, but the only difference between them is that the hanging man candle comes at the end of an upward trend and is a signal of a reversal of the trend towards the downside, unlike the hammer candle.
The candle indicates that the buying forces have ended their control over the market after they faced strong resistance. The price did not continue in the upward direction. This indicates that the price trend is about to change. If the hanging man candle is a bearish candle, it is a stronger signal of a possible market reversal than if the candle is bullish. It is preferable to wait for confirmation of a reversal of the price movement to the downside after the hanging man candle.
