How Hammer candle 🕯️ Work ?
A hammer candlestick is a bullish reversal candlestick pattern that is found in price charts of financial assets. It is formed when the price opens near the low of the day, falls to a lower low, and then rallies to close near the high of the day.
The hammer candlestick pattern is considered to be a sign of buying pressure, as it shows that sellers were initially in control of the market, but were then overwhelmed by buyers. This suggests that the trend may be about to reverse from bearish to bullish.
The hammer candlestick pattern is most reliable when it appears at the bottom of a downtrend. However, it can also appear in other market conditions, such as consolidation periods or even uptrends.
Some traders believe that the hammer candlestick pattern is even more bullish if the lower wick is twice the length of the real body of the candle. This is because it suggests that the sellers were unable to push the price down very far.
However, it is important to remember that the hammer candlestick pattern is just one indicator, and it should not be used in isolation to make trading decisions. Other technical indicators, such as moving averages and trendlines, should also be considered.
Here are some of the things to look for when interpreting a hammer candlestick pattern:
* The size of the lower wick: The longer the lower wick, the more bullish the pattern is considered to be.
* The position of the hammer: A hammer that appears at the bottom of a downtrend is more bullish than a hammer that appears in a consolidation period or even an uptrend.
* The color of the candle: A white hammer is considered to be more bullish than a black hammer. However, the color of the candle is not as important as the size of the lower wick and the position of the hammer.
Overall, the hammer candlestick pattern is a bullish reversal pattern that can be a useful tool for traders. However, it is important to use it in conjunction with other technical indicators and to be aware of the potential for false signals.
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