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How Do I Read Hammer Candles?

The hammer candlestick pattern is a potential bullish signal that forms during a downtrend. It is named so because it indicates that the market is "hammering" out a bottom.

A hammer candlestick visually presents:

  • A small body
  • The body is at the top
  • Lower shadow is 2 or 3 times length of real body.
  • Has no upper shadow or very small upper shadow if present.
  • The color of the body isn't important

How Do I Read Hammer Candlesticks Setup?

How Can I Analyze Hammer Candle-sticks Pattern Bullish or Bearish?

Analysis of the Hammer Candlesticks Pattern

You get a bullish reversal buy signal when a candlestick closes above the opening price of the candle just to the left of the hammer pattern.

Stop-loss orders should be placed a few pips just under the lowest point of the hammer candle after starting a trade using this candlesticks pattern.

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