How to Read Hammer Candlesticks Pattern

Hammer candle stick pattern is a potentially bullish candle stick pattern that forms during a xauusd downwards trend. It is named so because the xauusd market is hammering out a market bottom.

A hammer candle-stick pattern has:

• A small body
• The body is at the top
• The lower shadow is 2 or 3 times the length of real body.
• Has no upper shadow or very small upper shadow if present.
• The color of the body isn't important

How to Read Hammer Candles Pattern

Technical Analysis of Hammer Candles Pattern

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

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