Hammer Candlestick: shape, meaning and the confirmation it needs
The exact proportions that make a bar a hammer, why the same shape means different things depending on the trend it appears in, and why confirmation matters.
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Open the chartWhat it measures
A hammer has a small body near the top of its range, a long lower wick at least about twice the body’s size, and little to no upper wick.
It measures a bar that sold off hard intrabar and recovered almost all of it by the close — the same shape as a dragonfly doji with a slightly larger body.
How it is calculated
These are the steps Basis performs, verified against the published definition.
- 1
Body sits in the upper portion of the bar’s total range.
- 2
Lower wick length is at least roughly double the body length.
- 3
Upper wick is minimal.
- 4
The pattern is read as bullish specifically after a decline; the identical shape after an advance is read as a hanging man instead.
How to read it
- Context decides the read entirely — the same candle shape is a bullish reversal signal after a downtrend and a bearish warning after an uptrend.
- A hammer with unusually high volume describes real capitulation and recovery within the bar; a low-volume hammer is weaker evidence.
- Most practitioners wait for the next bar to close higher before treating the pattern as confirmed.
Where it misleads
Calling every long-lower-wick candle a hammer, regardless of the trend it sits in, is the most common misuse — the pattern has no meaning without the decline that precedes it.
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Updated 2026-08-27 · Educational reference, not financial advice.