What is the hammer pattern?
The hammer is a bullish candlestick pattern. A small body at the top of the range with a long lower shadow, after a decline. Sellers pushed price down and lost it all back.
How does the hammer form?
After a decline, a bar trades well below its open and then recovers almost all of it, closing near the high. What remains is a small body with a long lower shadow.
How do you confirm a hammer?
The lower wick should be roughly twice the body or longer, and the close should sit in the upper part of the range. A short wick makes it an ordinary bar.
When does the hammer fail?
A hammer into a level that has already broken tends to fail: the rejection is real but there is nothing underneath to hold it, and the next bar simply takes out the low.
No chart pattern works every time. The examples on this page were chosen because they show the pattern clearly, and in real markets patterns fail often.
Practice on real charts
3 real examples of the hammer, cut off where the pattern completed. Make your call, then see what happened.
The shaded area is a hammer. Where did price go next?
