The Hammer vs. The Hanging Man

Hammer. A hammer is a price pattern in candlestick charting that occurs when a security

trades significantly lower than its opening, but rallies within the period to close near the opening

price. This pattern forms a hammer-shaped candlestick in which the lower shadow

is at least twice the size of the real body. Hammer candlesticks indicate a potential

price reversal to the upside after a downtrend. The price must start moving up following

the hammer. This is called confirmation. This is bullish. On the flip side of this,

we have the hanging man candle. This is the bearish version of a hammer. Like a hammer,

they mark reversals, but at the end of an uptrend.