How Do I Analyze Hammer Candlesticks Pattern?

Hammer candle stick pattern is a potentially bullish candle stick pattern which forms during a downward stock trend. It is named so because the stocks market is hammering out a market bottoms.

A hammer candle-stick 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 color of the body isn't important

How Do You Analyze Hammer Candles Pattern?

Technical Analysis of Hammer Candlesticks Pattern

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

Stop Loss orders should be placed a few pips just below the low of the hammer candle stick once a trade is opened using this candles pattern formation.