Hammer

A pattern which is identified by a small body (white or black) at the upper end of the trading range and a long lower shadow. A Hammer forms when a security moves significantly lower after the open, but rallies to close well above the intraday low.
 
This is a bullish line if it occurs after a significant DownTrend. If the line occurs after a significant UpTrend, it is called a Hanging Man. An important note is that the Hanging Man should be confirmed, while a Hammer need not be.

 

Recognition Criteria:

·       DownTrend

·       A Spinning Top with a lower shadow greater than N% of the body length AND

        with an upper shadow less than M% of the total line range(High-Low)

 

Function: Hammer()

Trend: Bullish

Type: Reversal