Master the art of identifying and trading hammer candlestick patterns - a powerful technical analysis tool for predicting market reversals.
A hammer candlestick is a powerful bullish reversal pattern that forms during a downtrend. It features a small real body at the top of the candlestick and a long lower shadow that's typically twice the size of the real body. This pattern suggests that sellers drove prices lower during the trading period, but strong buying pressure reversed the trend, causing the price to close near the opening price.
The hammer pattern represents a significant battle between buyers and sellers, where sellers initially dominate but buyers ultimately prevail. This reversal in sentiment often indicates a potential trend change, particularly when combined with other technical indicators and market context.