Big Idea: Hammer candles are helpful for traders to find indications of a bullish reversal. They look like short bodies with long wicks to indicate a large amount of buying or selling occurred before the close of that specific timeframe. Two different types of hammer candles are regular hammer candles and inverted hammer candles.
This is an example of a hammer candle. This candle can either be red or green; what matters is how the candle looks. The long wick at the bottom suggests rejection from the lows of that candle and a possible bullish reversal.
Here is an inverted hammer. This candle also indicates a bullish reversal if it were formed in a downtrend.
Key Takeaways
-Hammer candlesticks are indicators of a bullish reversal
-The two covered in this section were called hammer candles and inverted hammer candles
-Hammer candlesticks have a long wick at the bottom, while inverted hammer candlesticks have a long wick at the top of the candle.
