Hammer

Anatomy

A hammer has a small real body sitting near the top of the range and a long lower wick — usually at least twice the body length — with little or no upper wick. The body color matters less than the long lower shadow.

Market psychology

Sellers pushed price sharply lower during the session, but buyers stepped in and dragged the close back up near the open. The long lower wick is the visible footprint of that rejection.

When it matters

A hammer is only meaningful after a clear downtrend and ideally at a prior support level. The same shape in the middle of a sideways range is noise. Above-average volume on the hammer strengthens the read.

Common beginner mistakes

• Treating any candle with a lower wick as a hammer, ignoring trend position — a hammer mid-range means nothing.
• Buying the hammer immediately instead of waiting for the next candle to confirm the rejection held.

Frequently asked questions

Is a red hammer still valid?

Yes. The long lower wick is what defines the rejection. A green body is slightly stronger because the close finished above the open, but a red hammer at support after a downtrend is still a meaningful signal.

How is a hammer different from a doji?

A hammer has a clear small body near the top with a long lower wick. A doji has almost no body at all (open ≈ close). Both show indecision or rejection, but the hammer leans more directional.