📊 Price Action·beginner

Hammer

A candlestick with a small body near the top and a long lower wick — a bullish reversal signal after a downtrend.

A hammer looks like exactly what it sounds like: a small body near the top with a long lower wick sticking down. The long wick shows that sellers pushed price way down during the period, but buyers took control and pushed it all the way back up before the close. Hammers are reversal signals, but only after a downtrend. A hammer in the middle of consolidation is just a candle. A hammer at the end of a 5-day sell-off at major support is a signal that the sellers are exhausted. The mirror image is the "shooting star" or "inverted hammer" — a small body at the bottom with a long upper wick, which is bearish at the top of an uptrend.

Real trade example

Apr 2024 hammer on Gold at $2,270 support after a 3-day pullback. Next day broke above hammer high, ran $80 to new ATHs within 5 sessions.

Related terms

Candlestick

beginner

A single price bar that shows open, high, low, and close for a given time period — the foundation of technical analysis.

Pin Bar

intermediate

A candlestick with a long wick in one direction and a small body at the opposite end — a rejection of that price level.

Shooting Star

beginner

A bearish candlestick with a small body at the bottom and a long upper wick — a rejection of higher prices at the top of an uptrend.

Engulfing Candle

intermediate

A candle whose body fully swallows the previous candle's body — a strong reversal signal.

Support

beginner

A price level where buyers have historically stepped in to stop the decline and turn price back up.

Inside Bar

intermediate

A candle whose entire range (high to low) is contained within the previous candle's range — a sign of consolidation and pending breakout.

← Back to glossary Ask the desk a follow-up →