<p>The <strong>Hammer</strong> is a bullish reversal candlestick pattern that appears at the bottom of a downtrend, signaling a potential shift from selling pressure to buying interest. It is characterized by a small real body near the top of the candle and a long lower shadow that is at least twice the length of the body, with little or no upper shadow. The shape resembles a hammer, hence the name, and indicates that although prices fell significantly during the period, buyers stepped in to push the price back up close to the opening level.</p>

<h2>How It Works</h2>
<p>The Hammer forms when the market opens, sellers drive the price lower, creating a deep trough, but then buyers regain control and push the price back up toward the open. The long lower shadow shows the extent of the selling pressure that was absorbed, while the small body reflects the narrow range between the open and close after the recovery. For the pattern to be considered a valid reversal signal, it should appear after a clear downtrend and be confirmed by subsequent bullish price action, such as a higher close on the following candle.</p>

<h2>Why It Matters</h2>
<p>Traders use the Hammer as an early warning that a downtrend may be losing momentum and that a bounce or trend reversal could be imminent. For example, if a stock has been falling for several days and a Hammer appears on the daily chart, a trader might look for a buying opportunity, placing a stop‑loss below the low of the Hammer to manage risk. Because the pattern is easy to spot and relies on pure price action, it is popular among both novice and experienced technical analysts.</p>