A hammer is one of the most-discussed single-candle reversal signals in technical analysis. Its shape is recognisable: a small body sitting near the top of the candle''s range, a long lower wick stretching well below the body, and little to no upper wick. By convention the lower wick is at least twice the height of the body. The colour of the body is secondary; the shape is the signal.
The hammer''s story is sellers in control losing control intraday. The session opens, sellers push price down hard (creating the long lower wick), buyers then step in and rally price back up to close near the high. The bar that started bearish ends with the close near or above the open — the opposite of what the start of the session suggested.
Critically, the hammer earns its name only after a downtrend. The same shape after an uptrend is called a hanging man and has a bearish bias instead. Same body + wick geometry, opposite context, opposite read. This is the most common beginner mistake — calling every hammer-shaped candle a buy signal regardless of where it sits in the trend.
Hammers are stronger when they print near a known support level (a prior swing low, a tested zone, a round number), and when the next candle confirms by closing higher than the hammer''s body. Without confirmation, the hammer is a stall, not a reversal. With confirmation, the structural read is: sellers ran out of supply at this level, buyers are now defending it, the trade is long with invalidation just below the hammer''s low.
Avoid acting on a hammer that prints in chop with no prior trend, or one with a body so large the lower-wick-to-body ratio doesn''t qualify. Pattern recognition without these filters is just shape-matching.