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How Can I Read Hammer Candles?

Hammer candlestick pattern is a potentially bullish candle pattern setup which forms during a downward trend. It's named so because the market is hammering a market bottom.

A hammer candlestick pattern has:

  • 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 Do I Analyze Hammer Candle-stick Pattern Bullish or Bearish?

Analysis of Hammer Candles Pattern

The bullish reversal buy trading signal is confirmed when a candle stick closes above the opening price of the candlestick on the left side of the hammer candle stick pattern setup.

Stop loss orders should be placed a few pips just below the low of the hammer candle once a trade position is opened using this candlesticks set-up formation.

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