Hammer
A hammer is a candle with a small body near the top and a long lower wick, appearing after a decline: sellers pushed the price down but buyers drove it back up.
Picture a session where sellers take the price sharply lower, then buyers step in and push it most of the way back. The candle that records this — a small head on a long handle — is the hammer.
- Category
- Technical Analysis
- Reading time
- 3 min
- Also called
- Hammer candle, Hammer candlestick, Hanging man (bearish twin)
- Updated
The hammer in plain words
A hammer forms when sellers push price well down after the open, but buyers drive it back to close near the top.1
It has a small body near the top and a long lower wick.2
It only counts during a decline.1 The same shape after an advance is a hanging man.1
How to read a hammer, step by step
Confirm a decline
Traders look for hammers after sustained downtrends.2
Check the shape
Small body near the top, long lower wick, little or no upper wick.2
Check location
Give more weight to a hammer at the end of a downtrend than to one in the middle of a move.2
Wait for confirmation
Most patterns require bullish confirmation.3
Define confirmation
Confirmation means upside follow-through, such as a gap up or a long white candle.3
Set a time limit
Wait for confirmation in the next one to three sessions.3
Worked examples
Example 1 — Classic hammer
Hammer formedA hypothetical stock falls from $50 to $40. Next day: open $40.20, low $38.00, close $40.40.
| Lower wick | $2.20 |
| Body | $0.20 |
Price fell well after the open but closed well above the low, during a decline — a hammer.1
Example 2 — Confirmed
Reversal confirmedThe next day gaps up to open at $41 and closes at $42.
| Hammer close | $40.40 |
| Next close | $42.00 |
A gap up is one form of bullish confirmation, arriving within the 1–3 day window.3
Example 3 — Hanging man
Bearish warning, not a buyThe same shape forms after a rise from $40 to $55.
| Prior trend | Up |
| Shape | Hammer-like |
After an advance the same candle is a hanging man, which also needs confirmation.2
Hammer vs hanging man
| Aspect | Hammer | Hanging man |
|---|---|---|
| Prior trend | Down | Up |
| Shape | Small body, long lower wick | Same |
| Bias | Bullish | Bearish |
| Needs confirmation | Yes | Yes |
How traders use the hammer
Bottom fishing with rules
Watching for a hammer at Support and Resistance after a fall.
Stop placement
Putting a Stop Loss just below the hammer's low.
Pullback entries
Using hammers to time entries on a Pullback in an uptrend.
Risk-reward planning
Measuring Risk-to-Reward Ratio from the low to the next resistance.
Advantages and disadvantages
Advantages
- Easy to recognise.
- Gives a clear stop level at the low.
- Shows buyers absorbing selling pressure.
Disadvantages
- Needs confirmation.
- Long wick can mean a wide stop.
- Identical shape means the opposite after a rise.
- Unreliable without a prior decline.
Going deeper
Read as far as you need. Each level builds on the one before it.
Rejection of lows
Beginner
Location
Intermediate
Twin shapes
Advanced
The hanging man looks identical but appears after an uptrend and also requires confirmation.2
Common mistakes
Ignoring the trend
Buying a hammer-shaped candle after a rally.
No confirmation
Entering before the next candle closes higher.
Stop too tight
Placing the stop above the hammer's low.
Mid-trend hammers
Treating every long lower wick as a bottom.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Small body on top, long lower wick.
- Needs a prior decline.
- Same shape after a rise is a hanging man.
- Wait for confirmation.
- The low makes a natural stop.
Frequently asked questions
Does the body colour matter?
What is an inverted hammer?
How long should the wick be?
Further learning
- Candlestick
How candles are drawn.
- Reversal
What the hammer hints at.
- Support and Resistance
Where hammers matter.
- Stop Loss
Protecting a hammer trade.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- StockCharts ChartSchool. Candlestick Pattern Dictionary (opens in a new tab) Checked .
- CMC Markets. Candlestick Patterns Explained: A Beginners Guide (opens in a new tab) Checked .
- StockCharts ChartSchool. Candlestick Bullish Reversal Patterns (opens in a new tab) Checked .
Read more elsewhere
- Trading Metrics (our sister site): Hammer (opens in a new tab)
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. Trading Metrics is our sister site, under the same ownership; we are not affiliated with any other publisher linked above. Last reviewed . Report an error or request a source credit.