Hammer

As explained in Investing for Programmers

A hammer is a candlestick pattern with a small body and a long lower wick that may indicate a reversal after a downtrend.

A hammer is a candlestick pattern with a small body and long lower wick. After a downtrend, it may indicate a potential reversal. section 10.2.1 section 10.4

Read the hammer through its candlestick components:

• Interpret the long lower wick as rejection of, or support near, lower price levels. section 10.2.1
• Treat the small body as limited separation between opening and closing prices, rather than strong momentum. section 10.2.1
• Use the pattern to discuss a possible change after declining prices, not as a guaranteed forecast. section 10.2.1

Figure 10.20 Various candlestick patterns in which we can describe the behavior of the market. In addition to the Doji, Hammer, and Engulfing patterns, we can see the volatility of prices. You immediately realize that candles with long bodies represent high volatility, whereas candles with multiple short bodies represent a calm market situation.

Compare the Hammer with Doji and Engulfing patterns while relating body size and wick structure to market behavior. section 10.2.1

How Investing for Programmers covers it

How deep it goes

Defines the body and lower wick, then stops at pattern interpretation without detailing validation or automated detection.

Examples

Compares Hammer, Doji, and Engulfing through a diagram of candlestick patterns and volatility.

What you can do after

Evaluate candlestick charts by recognizing a Hammer and interpreting its possible reversal context.

How it connects

Connects Hammer with candlesticks, downtrends, Doji, Engulfing, price action, and market reversals.

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