Hammer Candlestick Pattern
A Hammer Candlestick pattern occurs when a stock, commodity, or currency opens lower than its previous closing price but closes near or above that price. The candlestick resembles a hammer, with the main body showing the difference between the opening and closing prices. The wick (or shadow) represents the highest and lowest prices during the period. This pattern suggests a potential reversal, as the price decline is followed by strong buying pressure, pushing the price back up. Typically, it signals a bullish trend, indicating that sellers lost control and buyers may push the price higher in the future.
Related Terms
Adjusted Closing Price
The adjusted closing price of a stock reflects modifications made to account for corporate actions—such...
Convertible Arbitrage
Convertible arbitrage is a trading strategy where investors buy convertible securities (like bonds or preferred...
Gamma
Gamma (Γ) is a second-order derivative that measures the rate of change of an option's...
Advance/Decline Line
The Advance/Decline Line is a popular market breadth indicator that helps investors track the overall...
Units
Units represent your share in a mutual fund. The number of units you own indicates...
Forward Market
The forward market is a marketplace where forward contracts are traded. A forward contract is...
