Identifying a hammer.
- Small body near the top of the range.
- Lower wick at least twice the body's length.
- Little or no upper wick.
- Appears after a decline.
Inverted hammer and hanging man.
An inverted hammer has a long upper wick after a decline. A hanging man looks like a hammer but appears after a rally and can warn of weakness.
Trading it.
Enter on a break of the hammer's high, stop below its low, and target the next resistance. Skip hammers in the middle of a range where there is no level to react to.
FAQ