Technical analysis has been use by many people for many years, however, it is not a sole indication of what the stock may or may not be doing. It is important to take into account the fundamental and technical analysis a whole to formulate a well rounded opinion. The hammer certainly can give you indications on when to pay closer attention to the chart, but it may not be the for sure sign. It could also indicate a dead bounce, or when the stock bounces but there is no volume to support it. If you still have questions, reach out to an investing community and throw your ideas out there for other to critique.
Hammer
 | By Nathan Young | Macroaxis Story |
When looking at a candle chart, it can be confusing and difficult to determine where the chart may switch, but by looking for a hammer formation, it could boost your predictability. A hammer pattern is when a candle forms and trades lower than the open, usually significantly, but later closes near or sometimes higher than where it opened. This does not indicate a trend change necessarily, but it could indicate that the opposite side is gaining momentum and the trend could change at any moment.
Updated over a year ago View currently updated edicational stories | Filter Hammer |
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Reviewed by Vlad Skutelnik
When looking at the chart, it’s more noticeable and accurate when the candles previous are in the opposite direction. For example, when the chart is bearish and it has been bearish for three or more candles, you may see a candle trade far below the open but bounce back to close higher, this is the hammer. It may indicate that the buyers have stepped in and taken control because of various reasons. These candle patterns are easy to find, but you have to take into account there could be a fundamental reason rather than technical. Be sure to use all the different tools available to fully understand if this is a meaningful candle.
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