Bullish Hammer Candlestick Pattern: How to trade them

Bullish Hammer

A bullish hammer is a one-day candlestick pattern that signals a market turning point to bullish trends. A Hammer occurs after a stock price has been declining, suggesting that the market is attempting to reach the bottom.

A Hammer is formed after the sellers drive the prices down during the trading session, followed by a strong buying pressure and drives prices back up.

How to recognize it?

• Looks like the letter T
• The opening price and closing price are very close to each other forming a very small candlestick body
• The lower shadow is at least twice its body size

How to trade?

The Bullish Hammer candlestick pattern is a powerful signal that can be used to trade a variety of markets. Here are a few ideas on how to trade this pattern:

1. Look for the Bullish Hammer pattern after a period of bearish price action. This suggests that the market is ready to reverse and head higher.
2. Enter a long position when the candlestick closes above the high of the Bullish Hammer.
3. Place a stop loss just below the low of the Bullish Hammer.
4. Target the previous high for your take profit level.
5. You can also look to trade the Bullish Hammer pattern on higher timeframes such as the daily or weekly chart. This can give you a longer-term view of the market and help you stay in winning trades for longer.

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