Hammer is a widely used bullish trend reversal technical chart indicator. Investors utilize it to identify the trend reversal points in the chart. This candlestick represents the loss of control of prices by bears. KEEV makes the process of using Hammer candles super easy for users.  

In This Article 

You will understand the following mentioned below.

• What is Hammer? 

• How To Analyze the Chart Using a Hammer?

• How To Use the Hammer on KEEV?

Category 

Trend 

Type 

Lagging 

What is Hammer?

Hammer is a single candle pattern formed during a downtrend in the market. It is an extensively used technical chart indicator depicting the bullish reversal in the market. In this case, the closing prices will be close to the opening prices since the body of the hammer remains small.

You can use these benchmarks to identify the Hammer with ease.

• The Hammer resembles a “T” shape.

• Ideally, the candle must have either no upper wick or a very short upper wick.

• The lower wick of the candle must be two times the height of the body.

• Consider it a hammer only if the candle is formed after a downtrend.

• The color of the body is not important here. 

In the above chart, you can notice a candle (green) is circled and that is in a ‘T’ shape. It is basically a hammer candle pattern. 

If you have a deeper look at the chart, there is a downtrend before the hammer is formed. Once the hammer is identified you can notice an uptrend in the market. And this is a reversal in the ongoing trend in the market. 

It indicates the bulls have taken over the prices by pushing them upward and thus bears have lost control over the prices. 

When identifying a hammer make sure that there are at least three or more candles which are in a downtrend before a hammer candle. Also, consider that the candlestick color doesn’t carry much weight because the hammer will always show a bullish signal regardless of the candle’s body color. 

The hammer shows an uptrend and signals to buy.