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Trading and Investment Terminology

Hammer

Hammers have a small real body and a long lower shadow.

Hammers occur after a price decline.

The hammer candlestick shows sellers came into the market during the period but by the close, the selling had been absorbed and buyers had pushed the price back to near the open.

The close can be above or below the open, although the close should be near the open for the real body 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.
 

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