Hammer
A Hammer is a single-candle bullish reversal with a small body at the top of the range and a long lower wick at least twice the body height, printed at the bottom of a downtrend to signal buyers rejecting lower prices.
What it measures
The candle has a small real body (green or red) in the upper third of its range, a lower wick at least 2× the body height, and little to no upper wick. The long lower wick is the signal — price sold off during the candle and was bought back by the close.
Parameters
| Name | Default | Range | Note |
|---|---|---|---|
| wick_to_body | 2.0 | 1.5–4.0 | Minimum ratio of lower wick to body. Higher values require more dramatic rejection. |
| upper_wick_max | 15 | 5–30 | Maximum upper wick as percentage of range. A clean hammer has almost no upper wick. |
| require_downtrend | true | true, false | Restrict to candles printed after a downtrend. A hammer in a range is a doji-with-a-tail, not a reversal. |
How it behaves
A hammer at the bottom of an established downtrend, especially at a support level with rising volume, is a strong reversal cue. The next candle's close above the hammer's high is the classical confirmation trigger.
When it misleads
Hammers in ranges are pure noise. In strong downtrends without a level to anchor to, the hammer often marks a one-day bounce that fails immediately. Also watch for hammers on low volume — the "rejection" was a handful of small buyers, not a real order-flow shift.
Backtest result
Sourced backtest in preparation — we're running the rule on our own historical candles before publishing numbers we can stand behind.
FAQ
- Hammer vs Hanging Man — same candle?
- Anatomically identical. The difference is context: a hammer prints after a downtrend and is bullish; a hanging man prints after an uptrend and is bearish. Same shape, opposite meaning.
- Does the hammer's body colour matter?
- Green (close > open) is preferred — buyers ended the candle winning. Red hammers are still valid but slightly weaker signals.
- What is an Inverted Hammer?
- The mirror pattern — small body at the bottom of the range with a long upper wick. It signals rejection of higher prices during the candle but a close near the low; in a downtrend it can still be bullish because it shows buyers pushed up hard, but confirmation is more important than for a standard hammer.
Build a strategy with Hammer
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