Hammer
the hammer is essentially a Dragon-Fly formation with a slightly bigger body the hammer is formed when
the opening price and the closing price are corny at the same level.
The vertical line represents the lowest rating price of that specific timeframe.
The hammer pattern is formed when the following two conditions are present.
The length of the lower shadow must be at least twice the size of the body of the candle.
The longer the shadow the stronger the potential for a reversal
there is no better shadow.
It is a perfect hammer.
However if there is a very small aperture though the formation is the can see the hammer pattern.
The upper shadow represents the highest trade in price of that specific time frame.
If the closing price is higher than the opening price the quality of the candle is green if the closing
price is lower than the open price.
The color of the candle is red and red hammer is more Berish energy than a green hammer.
A green hammer is more bullish energy than a rock hammer.
The color of the candle is not as important as the position where the hammer is located in the grand
when the hammer appears at the bottom of a downtrend or after a series of red candles and possibly in
oversold conditions.
This indicates that the reversal is about to occur.
In this case the hammer pattern is a bullish reversal.
However for further bullish more information is required.
If the next day the price opens above the previous that close and the Bulls the buyers are taking the
price up.
This is the bullish confirmation that the reversal has occurred.
It is time to buy or to go along.
On the other hand if the next day the price opens below or near the previous they close and the sellers
the Bears start taking the price down.
This indicates that we are still in a downtrend.
Be patient and wait for further bullish patterns to form
in this lesson.
You're going to learn about the hammer is a bullish reversal pattern.
In the following lesson you will learn the hammer Barish counterpart the hanging man.