Glossary Term

Hammer

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In trading, a hammer is candlestick shape resembling a hammer because it has a short real body and a long lower wick. The shape is formed because the asset trades at a lower price than its opening during the period, but then rises back to around the price level that it opened at. If it closes slightly above its opening price it will be a green hammer, if it closes slightly below its opening price it will be a red hammer. A green hammer is considered more bullish because not only did the bulls manage to raise the price back up during the period, they even managed to push it beyond the opening price.

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