A Hammer is a single candle with a small body near the top and a long lower wick at least twice the body's height, with little or no upper wick. Appearing after a downtrend, it shows sellers pushed price down but buyers reclaimed most of the loss.
How traders read it
- Treat it as a potential bullish reversal after a decline.
- The longer the lower wick relative to the body, the stronger the signal.
- Confirmation comes from a higher close on the following candle.
See it in dtcharts
Turn on candlestick pattern detection in the dtcharts terminal — every hammer is marked on the chart with its historical reliability score, so you can judge how often it has actually played out.