Hammer candlestick

The Hammer candlestick forms when the open, high, and close are nearly the same, with a long lower shadow signaling a bullish rejection by buyers aiming to drive the market higher.

The hammer is a reversal candlestick pattern when it occurs at the bottom of a downtrend .

Characteristics of a Hammer Candlestick:

1. Shape: The hammer has a small body with a long lower shadow (at least twice the length of the body). The upper shadow is either very small or nonexistent.
2. Color: The color of the hammer’s body can be either green (bullish) or red (bearish). However, a green hammer is often considered more bullish because it indicates a stronger buying pressure.
3. Position in Trend: The hammer must appear after a downtrend. This is essential because the pattern is only considered a reversal signal when it follows a decline.https://myntr.it/jy79tcG

Interpretation:

• Bullish Reversal Signal: The long lower shadow indicates that sellers pushed the price down significantly during the trading session, but strong buying pressure ultimately drove the price back up near the opening level. This suggests that buyers are starting to gain control.

Example

As you can see the market was trending down, the formation of the hammer (pin bar) was a significant reversal pattern.
The long shadow represents the high buying pressure from this point. Sellers was trying to push the market lower, but in that level the buying power was more powerful than the selling pressure which results in a trend reversal.