HAMMER CANDLESTICK PATTERN A hammer is a price pattern in candlestick charting that occurs when a security trades significantly lower than its opening, but rallies within the period to close near the opening price. This pattern forms a hammer-shaped candlestick, in which the lower shadow is at least twice the size of the real body. The body of the candlestick represents the difference between the opening and closing prices, while the shadow shows the high and low prices for the period. KEY POINTS: - Hammer candlesticks typically occur after a price decline. They have a small real body and a long lower shadow. -The hammer candlestick occurs when sellers enter the market during a price decline. By the time of market close, buyers absorb selling pressure and push the market price near the opening price. -The close can be above or below the opening price, although the close should be near the open for the real body of the candlestick to remain small. -The lower shadow should be at least two times the height of the real body. -Hammer candlesticks indicate a potential price reversal to the upside. The price must start moving up following the hammer; this is called confirmation. A hammer occurs after the price of a security has been declining, suggesting that the market is attempting to determine a bottom. Hammers signal a potential capitulation by sellers to form a bottom, accompanied by a price rise to indicate a potential reversal in price direction. This happens all during a single period, where the price falls after the opening but regroups to close near the opening price. A hammer should look similar to a “T.” This indicates the potential for a hammer candle. A hammer candlestick does not indicate a price reversal to the upside until it is confirmed. Confirmation occurs if the candle following the hammer closes above the closing price of the hammer. Ideally, this confirmation candle shows strong buying. Candlestick traders will typically look to enter long positions or exit short positions during or after the confirmation candle. For those taking new long positions, a stop loss can be placed below the low of the hammer’s shadow. Hammers aren’t usually used in isolation, even with confirmation. Traders typically utilize price or trend analysis, or technical indicators to further confirm candlestick patterns. Hammers occur on all time frames, including one-minute charts, daily charts, and weekly charts. INVERTED HAMMER CANDLESTICK PATTERN The Inverted Hammer candlestick formation occurs mainly at the bottom of downtrends and can act as a warning of a potential bullish reversal pattern. What happens on the next day after the Inverted Hammer pattern is what gives traders an idea as to whether or not prices will go higher or lower. The Inverted Hammer formation is created when the open, low, and close are roughly the same price. Also, there is a long upper shadow which should be at least twice the length of the real body. After a long downtrend, the formation of an Inverted Hammer is bullish because prices hesitated to move downward during the day. Sellers pushed prices back to where they were at the open, but increasing prices shows that bulls are testing the power of the bears. How Do You Trade on an Inverted Hammer Candlestick? It is important to note that the Inverted pattern is a warning of potential price change, not a signal, by itself, to buy. Other indicators such as a trendline break or confirmation candle should be used to generate a potential buy signal. Visit: https://newscrypto.io/ NewsCrypto is the number one crypto educational platform, offering an unparalleled array of tools, unique market insight indicators and top-notch educational content suited to both novice and experienced traders. Newscrypto offers: - Free education - Cryptocurrency market information and overview - Important news from the crypto world in real time - Comprehensive set of trading tools - Indicators and market analysis benchmarks - Proprietary Ai price prediction tools - Crosschain bridges - Mobile wallet and app - ... FOLLOW: Telegram: https://t.me/NWC_PublicChat Twitter: https://twitter.com/NwcPublic Discord: https://discord.com/invite/b5v5k4ZwCv NWC at Kucoin: https://www.kucoin.com/trade/NWC-USDT #crypto #trading #tradingpattern #bitcoin #ethereum #cryptocurrency

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