What is Hammer Candlestick?

A hammer candlestick is a type of candlestick chart pattern that is commonly used in technical analysis to identify potential reversals in the price of an asset.

A hammer candlestick has a long lower shadow and a small body, with little or no upper shadow. The body of the candlestick is typically at the upper end of the price range for the period being analyzed, while the lower shadow extends well below the body.

The pattern gets its name from its resemblance to a hammer, with the long lower shadow representing the handle and the small body representing the head.

Traders often interpret a hammer candlestick as a bullish signal, indicating that the selling pressure has been overcome and that buyers have entered the market. However, it`s important to note that a hammer candlestick is not a guarantee of a trend reversal and should always be considered in the context of other technical indicators and market factors.