The hammer is one of the most recognised bullish reversal candlestick patterns. It appears after a downtrend and has a small real body near the top of the range with a long lower wick that is at least twice the length of the body, and little or no upper wick.
The shape tells a story: during the session sellers pushed the price sharply lower, but by the close buyers had stepped in and driven it back up near the open. That rejection of lower prices is what makes the hammer a potential bottom signal, especially when it forms right at a support level.
▶ Practice the Hammer pattern free →Traders usually wait for the next candle to close higher to confirm the hammer before buying. A common plan is to enter above the hammer's high, place a stop-loss just below its low, and target the next resistance with at least a 1:2 risk-reward. The hammer is more reliable with higher-than-average volume.
See all patterns in our candlestick patterns guide, or compare it with related patterns like bullish engulfing, inverted hammer, doji. Or jump straight into the free trainer to test yourself.