Proportions that define a valid hammer
- Lower shadow. At least twice the length of the body — three times is stronger.
- Upper shadow. Very small or absent. A long upper shadow turns it into a different, weaker candle.
- Body position. In the top third of the total range. Colour matters less than position, though a green body is marginally stronger.
- Range size. Comparable to or larger than recent candles. A tiny hammer in a quiet session is not a rejection.
Location decides everything
A hammer at the low of a multi-day decline, landing on a level that previously acted as support, is a genuine rejection of lower prices. The identical candle in the middle of a range is just an intraday swing. Before you count a hammer, mark your levels: prior swing lows, a moving average that has held before, or the bottom of a value area. No level, no trade.
Hammer, hanging man, inverted hammer, shooting star
These four candles share two shapes and differ only by where they appear. Hammer and hanging man are the same shape — long lower shadow — but the hammer appears after a decline and the hanging man after a rally. Inverted hammer and shooting star share the long upper shadow, appearing after a decline and after a rally respectively. Get the trend context wrong and you read a bullish signal as bearish.
Trading a hammer with defined risk
- Confirm the prior move is a decline, not a range.
- Check the hammer's low is touching or piercing a level you already marked.
- Enter on a close above the hammer's high, or on a limit order at the hammer's midpoint if you accept a worse fill probability.
- Stop below the hammer low plus a volatility buffer.
- First target the nearest resistance; only take the trade if that gives at least 1:2.
How Vision AI evaluates a hammer
Upload a screenshot and the AI measures the shadow-to-body ratio, checks the preceding trend direction, tests whether the low aligns with a prior level, and reads the volume bars underneath. Instead of yes or no, it returns the conditions: what would confirm the reversal and what would invalidate it.
Hammer family cheat sheet
| Candle | Shape | Context and meaning |
|---|---|---|
| Hammer | Long lower shadow | After a decline — bullish rejection |
| Hanging man | Long lower shadow | After a rally — bearish warning |
| Inverted hammer | Long upper shadow | After a decline — weak bullish, needs confirmation |
| Shooting star | Long upper shadow | After a rally — bearish rejection |
Verify the hammer before you take it
Upload the chart and get the proportion check, the level it formed at, and the invalidation price.
Analyze a chart freeFrequently asked questions
What is a hammer candlestick pattern?
A hammer is a single candle with a small body near the top of the range and a lower shadow at least twice the body length. It shows sellers pushed price down during the period and buyers reclaimed almost all of it.
Is a hammer always bullish?
No. A hammer is only a bullish signal after a decline and at a support level. The same shape appearing after a rally is a hanging man, which carries a bearish warning instead.
What is the difference between a hammer and an inverted hammer?
A hammer has the long shadow below the body; an inverted hammer has it above. Both appear after declines and both need confirmation, but the inverted hammer shows buyers testing higher and failing to hold, which is a weaker signal.
How do you confirm a hammer?
Wait for the following candle to close above the hammer's high. Above-average volume on the hammer itself and on the confirmation candle makes the signal considerably more reliable.
Where do you place the stop on a hammer trade?
Below the hammer's low, plus a buffer for spread and volatility. If that stop is too wide for your position size, reduce size rather than tightening the stop into the shadow.