Hammer
Technical Analysis
What it means
A candle with a small body near the top and a long lower wick, forming a hammer shape. It suggests buyers rejected lower prices and a bounce may follow.
Example
After a decline, a stock opens at $95, drops to $90, then closes at $94.80. The long lower wick and small body near the top form a hammer at support.
Mistake beginners make
Beginners see a hammer anywhere and buy. A hammer only matters after a downtrend and at support -- one in the middle of nowhere is just noise.
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