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What is a Hammer Candlestick?The Hammer Candlestick is a bullish candlestick that signals a reversal after a decline. This candlestick has a short real body with a long lower shadow and very little, or no upper shadow.
The price opens and continues its downward trend. The bears are in control. Then the bulls step in, and drive the price to a new high for the day. This shows that the bulls have now taken control from the bears. Confirmation is needed. A higher open on strong volume would be ideal. This candlestick, like Doji, Marubozu, Hanging Man, and other single candles, are more significant when grouped with other candles to form a Japanese candlestick pattern.
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