The hammer pattern appears when an asset is trading below its opening price but gradually rises in the selected time frame and closes near its opening price.
The figure is formed within one candle and visually resembles a hammer or the letter “T”: a small body and a lower wick at least twice as long as the main part.
This pattern signals a bullish trend reversal if the hammer is followed by a so-called confirmation, i.e. the next candle should have a higher closing price than the previous one.
It is worth noting that the pattern must appear in the context of a downtrend to indicate a reversal towards a bullish market.
I will describe it in detail in the following posts.
Types of charts and what are their features…
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