Candlestick patterns: what they are and how to read the Hammer
Japanese candlesticks tell what buyers and sellers did over a period. Some recurring shapes — the patterns — signal possible reversals.
How a candle is made
Each candle has a body (between open and close) and two shadows (the highs and lows reached). Green/white if the price rose, red/black if it fell.
The Hammer pattern
The Hammer has a small body at the top and a long lower shadow (at least twice the body). It appears after a decline and suggests buyers rejected the lows: a possible bounce.
Alone it isn't enough
A pattern is a clue, not a buy order. It must be confirmed by context: where it sits (after a drop?), the volume, and the next candle confirming direction.
Probability, not guarantee
Even the most reliable patterns work only part of the time. That's why you measure their historical success rate on data instead of trusting theory.
Frequently asked questions
What is a candlestick pattern?
A recurring shape of one or more Japanese candles that signals a possible change in price direction.
What does the Hammer pattern indicate?
Small body and long lower shadow after a fall: buyers rejected the lows, a possible bounce.
Does a pattern guarantee the move?
No: it's a historical probability. Confirm it with context, volume and the next candle.
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