Hammer Candlestick: The Reversal Signal Every Trader Should Know

Seen that candle with a tiny body and a long wick at the bottom? That’s the Hammer—and it’s basically the market screaming “buyers are fighting back!”

Here’s the deal: When price gets hammered down but closes near the open, it signals a potential bullish reversal. The long lower wick proves sellers had control initially, then buyers yanked it back up. Mirror that pattern after an uptrend? You get the Hanging Man (bearish signal).

The 3 Types That Matter

Bullish Hammer: Small body, close > open, long lower wick = potential bottom after downtrend

Inverted Hammer: Same thing but wick on top = less reliable but still bullish after a dip

Shooting Star: Close < open, long upper wick after uptrend = sellers showing up to the party

Why It’s Useful (But Not Magic)

Works across any timeframe—daily charts, 4H scalping, you name it. The catch? Context is everything. A hammer near support hits different than one in a vacuum. Always pair it with RSI, moving averages, or volume confirmation before pulling the trigger.

Pro tip: Hammer ≠ guaranteed reversal. Use stop losses, manage risk, and treat it as one signal among many. That’s how you actually make money.