Forex glossary
Hammer
A hammer is a candle after a decline with a small body near the range's upper end, a long lower shadow and little upper shadow. A common rule requires the lower shadow to exceed twice the body. The same shape after an advance is a hanging man; reversal is not established.
Illustrative example
How does it work in practice?
Assume a decline is followed by a candle opening at 100, closing at 101, with a low of 97 and high of 101.2. Its three-unit lower shadow and one-unit body fit a hammer.
A case to work through
Same shape, different context
Hypothetically, O=80, C=81, L=77 and H=81.2; price rose before this candle.
- The body spans 1 and the lower shadow is min(O,C)−L=3.
- The geometry resembles a hammer, but after a rise its classic context is a hanging man.
What follows? Record shape and preceding direction separately.
Example boundary: The shadow-to-body ratio does not assign a probability to a rise or fall.
A useful distinction
Hammer / Shooting Star
A hammer has a long lower shadow after a decline; a shooting star has a long upper shadow after a rise.
Check your understanding
Separate candle geometry from naming context.
Show the answer and explanation
The classic contextual label to hanging man
Shape alone does not settle the name.
Bodies, shadows and context
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Read the fuller explanation
Related terms
Sources and documentation
- TA-Lib – ta_CDLHAMMER
Original OHLC body/shadow detection code and configurable candle thresholds; implementation is not effectiveness evidence.
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