How Do I Analyze Hammer Candles Pattern?

Hammer candlestick pattern is a potentially bullish candle-stick pattern which forms during a forex downtrend. It is named so because the market is hammering out a market bottoms.

A hammer candle pattern has:

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

How Do I Interpret Hammer Candlesticks Pattern?

Technical Analysis of Hammer Candles Pattern

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

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