The formation of the hammer occurs when the opening, the top and the near have about the same price. There is also a long, lower shadow, twice as long as the real body.
If the height and proximity are the same, the formation of a bullish candelabrum, which is considered stronger training because the cops could refuse to bear completely and the cops could push the price even more than the price of opening on.
On the contrary, if the opening and height are the same, this hammering is considered less bullish but still bullish. The bulls were able to candlestick patterns counter the bear, but could not return the price at the opening price.
The long shadow of the hammer implies that the market has been tested to find out where the support and the demand are. When the market found the support zone, the lows of the day, the bulls started to raise prices near the opening price. As a result, the bearish bearish movement was rejected by the bulls.
In the previous AIG chart, the market started the day test where the demand would come on the market. The price of AIG shares finally found support at least a day. In fact, there was so much support and buying pressure that prices beat the day higher than the opening, a very bullish sign.
The hammer is an extremely useful sailing model that helps operators identify where support and demand are. After a downtrend, the hammer can signal traders that the downtrend may be over and short positions may be covered.
However, you need other indicators used in conjunction with the hammer candlestick pattern for possible purchase signals, for example, waiting for a day to see if there is an increase in hammer formation or other references to the map it continues as a forex indicators break from a descending trend line, but traces of another day earlier could enter into an analysis of traders. An example of this information in the previous AIG box shows three previous doji (a sign of hesitation), which pointed out that prices could reverse the trend; In this case, and for an aggressive buyer, hammer training could be the potentially long trigger.