hammer candle stick

A hammer candle is a bullish reversal candlestick pattern that signals a potential change in the direction of a downtrend. It consists of a small body at the top of the candle with a long lower shadow, resembling a hammer. This pattern indicates that sellers drove the price lower during the trading session but were unable to maintain control, leading to a strong buying pressure and a potential upcoming uptrend. Traders often look for confirmation from the following candle to validate the reversal signal provided by the hammer candle.

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This is a Bullish trading pattern, when a stock reaches its maximum and lower level then we see a hammer being formed which tells us that the price of this stock is going to change in the market, and this Can show upward momentum.

What is the color of hammer candle?

The color of a hammer candle can be green or red or black or white, the color is not important.

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HOW TO IDENTIFY HAMMER CANDLE

• We can identify the hammer candle quite easily because it looks like a hammer.
• To identify a hammer candle, we have to look at its body and shadow.
• In a hammer candle, the body is small and its shadow is large.
• As shown in the picture. In a hammer candle, the shadow of the hammer is two (2×) or three times (3×) larger than its body. Any candle is considered a hammer candle only when its shadow is two or three times larger than its body, otherwise it is not considered a hammer candle.
• This long shadow means that traders have pushed the appropriate stock far down but buyers want it to come back up.

candle chart hammer

HOW TO USE HAMMER CANDLE IN TRADING?

By using Hammer Candle we can take a good trade by which we can find out the Stop loss and Target, hence it is important for us to know these things to use Hammer Candle.

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Where to place stop loss in hammer candle?

When a hammer candle is formed in the down train and another green candle is closing above it, then we have to take positions or entry in the market, after that we have to keep the stop loss at the low point of the hammer. Is .

HAMMER CANDLE TARGET? । How to set target in hammer candle?

After confirmation of the hammer candle, when we enter the market after the formation of a green candle, we have to set a target by looking at its resistance on the chart.

For this you should see support and resistance on the chart or you can set a target three or four times the stop loss you set.

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