How Do You Interpret Hammer Candlesticks Technical Analysis?

Hammer candle pattern is a potentially bullish candlestick pattern which occurs during a downwards trend. It is named so because the market is hammering a bottom.

A hammer candle pattern has:

• A small body
• The body is at the top
• The lower shadow is two or three times length of the real body.
• Has no upper shadow or very small upper shadow if present.
• The colour of the body isn't important

How Do I Analyze Hammer Candlesticks Technical Analysis?

Technical Analysis of Hammer Candles Setup

The bullish reversal buy signal is confirmed when a candle-stick closes above the opening price of the candle-stick on the left side of the hammer candlestick pattern.

Stop Loss orders should be set few pips just below the low of hammer candlestick once a trade is opened using this candlesticks setup formation.