Stock Market · Technical Analysis

Hammer, hanging man, shooting star

The Hammer, a bullish reversal

A hammer has a small body at the top, a long lower wick (at least 2× the body), and little or no upper wick. It looks like a hammer being driven into the ground.

What happened: Sellers pushed price down hard during the session, but buyers came in and pushed it all the way back up by close. Bears tried and failed.

> Found after a downtrend near support, the hammer signals that the sell-off may be exhausted.

Colour matters less. A green hammer is slightly more bullish than red, but both count.

Hanging Man. The same shape, different meaning

Identical candle shape to a hammer, but it appears after an UPTREND. Same long lower wick, small body at top.

The interpretation flips: sellers showed up for the first time in a while and pushed price down significantly during the session. Even though buyers recovered by close, the warning sign is that sellers are getting active.

• After downtrend = Hammer (bullish)
• After uptrend = Hanging Man (bearish warning)

Shooting Star, the bearish Hammer

Small body at the BOTTOM, long UPPER wick, after an uptrend. Buyers pushed price high but sellers crushed it back down by close. The long upper wick shows rejection at higher prices.

This is the bearish counterpart of the hammer. Look for it near resistance zones after a rally for maximum reliability.

Contextdetermines whether these candles signal reversal or noise

Confirmation rule

Always wait for confirmation on the next candle. A hammer followed by another red candle is less convincing than one followed by a strong green breakout candle.

Takeaway. Hammer after downtrend = bullish. Hanging man after uptrend = bearish warning. Shooting star after uptrend = bearish.