Beginner3 min readLast updated: 2026-06-10
Hammer Candlestick Pattern — Complete Guide
Master the Hammer pattern. Learn identification rules, psychology, optimal trading locations, entry/exit strategies, and real-world examples.
What is the Hammer?
The Hammer is a bullish reversal single-candle pattern that forms at the bottom of a downtrend. It signals that sellers pushed price down significantly during the session, but buyers stepped in strongly and pushed price back up near the open — rejecting lower prices.
Identification Rules
| Component | Requirement |
|---|---|
| Body | Small body at the UPPER end of the range |
| Lower wick | At least 2× the body length (the longer the better) |
| Upper wick | Very small or non-existent |
| Color | Bullish (green) preferred, but bearish (red) also valid |
| Location | Must appear after a downtrend or at support |
Hammer:
┃ ← Small/no upper wick
┏┓ ← Small body (top of range)
┗┛
┃
┃ ← Long lower wick (2x+ body)
┃
Psychology
- Session opens after a downtrend
- Sellers push price significantly lower (creating the long lower wick)
- Buyers step in aggressively and push price all the way back up
- Session closes near the open (or higher)
- Message: Sellers tried their hardest but FAILED — buyers are returning
How to Trade
Entry:
- Conservative: Enter above the Hammer's high on the next candle
- Aggressive: Enter at the close of the Hammer candle
Stop Loss:
- Below the Hammer's low (the wick) + 5-10 pip buffer
- This is the "if wrong" level — if price goes below, the pattern failed
Take Profit:
- Next resistance level or swing high
- 1:2 or 1:3 Risk:Reward minimum
- Previous structure high
Confirmation:
- Next candle closes bullish (above Hammer's close)
- Forms at key support level
- Higher timeframe is bullish
- Volume increase on the Hammer
Context is Everything
A Hammer in the middle of nowhere is meaningless. It MUST form at a significant support level, Order Block, or after a clear downtrend to be valid. Location determines probability.
Hammer vs. Similar Patterns
| Pattern | Location | Signal |
|---|---|---|
| Hammer | Bottom of downtrend | Bullish reversal |
| Hanging Man | Top of uptrend | Bearish reversal |
| Pin Bar | Any (includes both) | Rejection signal |
Related Topics
- Candlestick Psychology — Why wicks form
- Support & Resistance — Where to look for Hammers
- Confirmation — Confirming the pattern