How many minimum daily candlesticks should be there in a downtrend before a hammer candlestick in order for it to be a confirmed downtrend?
At least 5-6 trading sessions (downtrend) amounting to a decline of about 5-8% should be fine.
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A Hammer candlestick pattern is a bullish reversal pattern that forms after a downtrend, signaling potential price recovery.
Key Features:
- Small Body Located at the upper part of the candle range.
- Long Lower Wick: At least twice the length of the body, indicating rejection of lower prices.
- No or Small Upper Wick Minimal upper shadow.
- Appears After a Downtrend Indicates potential reversal to the upside.
Interpretation:
It shows that sellers pushed the price down, but buyers stepped in and drove the price back up, signaling potential bullish momentum.
It’s a strong indication of a potential price reversal from bearish to bullish. You can check Top Stock Research platform for Hammer, Inverted Hammer & many other patterns. Maybe it will be useful to you.