Single Candle Patterns
Hammer
Bullish Reversal
The hammer is a type of most important Bullish reversal candlestick pattern.
This single candlestick is used by many traders to trade stocks, ETFs, commodities and forex.
This is a powerful candle with one long lower shadow that occurs when a market significantly lower than its opening price, but rallies later in the day to close either above or near its opening price. Where the leg of hammer should be at least double of its real body then it indicates a very Bullish signal.
Criteria of Taking Trades
- The lower shadow should be at least two times the length of its real body.
- The real body should be at the lower end of the trading range.
- The color of the body is not important although a white/green body should have slightly more importance for Bullish signal.
- There should not be an upper shadow or a very small upper shadow.
- Another candle needs to confirm the Hammer signal with a white/green candle & a gap up with a higher close.
- The longer the lower shadow of Hammer, the higher the potential of a reversal occurring.
- A little gap up from the previous day close sets up for a stronger reversal move provided the day after the Hammer signal trades higher.
- The candle should be formed at the Support zone.
Inverted Hammer
Bullish Reversal
The Inverted Hammer is a type of Bullish reversal candlestick pattern.
This is a powerful candle with a long shadow that occurs when a market significantly higher than its opening price, but rallies later in the day to close either above or near its opening price.
The Inverted Hammer looks like an upside-down version of the Hammer candlestick pattern. The upper shadow of the Inverted Hammer should be at least double of its real body, which indicates a very Bullish signal. When it appears in an uptrend it is called a Shooting Star.
When you see the Inverted Hammer after a downtrend this is a great sign of a potential reversal of the market — but before placing any order you should wait for the next candle to open higher than the close of the previous candle & should close above the previous candle to confirm the Bullish sign.
Criteria of Taking Trades
- The upper shadow should be at least two times the length of its real body.
- The real body should be at the upper end of the trading range.
- The color of the body is not important although a white/green body should have slightly more importance for bullish signal.
- There should not be a lower shadow or only a very small lower shadow.
- Another candle needs to confirm the Inverted Hammer signal with a white/green candle & a gap up with a higher close.
- The longer the upper shadow of Inverted Hammer, the higher the potential of a reversal occurring.
- A little gap up from the previous day's close sets up for a stronger reversal move provided the day after the Inverted Hammer signal trades higher.
- The candle should be formed at the Support zone.
Hanging Man
Bearish Reversal
Hanging Man is a Bearish reversal candlestick pattern.
It is made up of just one candle with a long lower shadow and has a small real body at the upper end of the candle. A small upper shadow may or may not appear above the body, which is Bearish in nature and appears at the end of the uptrend.
A Hanging Man candle is identical to the Hammer but it appears at the end of an uptrend.
Criteria of Taking Trades
- The lower shadow should be at least two times the length of its real body.
- The real body should be at the upper end of the trading range.
- The color of the body is not important although a black/red body should have slightly more importance for bearish signal.
- There should not be an upper shadow or only a very small upper shadow.
- Another candle needs to confirm the Hanging Man signal with a black/red candle & a gap down with a lower close.
- The longer the lower shadow of Hanging Man, the higher the potential of a reversal occurring.
- A little gap up from the previous day's close sets up for a stronger reversal move provided the day after the Hanging Man signal trades lower.
- The candle should be formed at the Resistance zone.
Shooting Star
Bearish Reversal
The Shooting Star is a type of most powerful Bearish reversal candlestick pattern comprising short candles with one long wick. It occurs when a market opens significantly higher than its opening price, but rallies later in the day to close either above or near its opening price.
The Shooting Star looks exactly like the Inverted Hammer but forms in an uptrend. The upper shadow of the Shooting Star should be at least double of its real body, indicating a very high Bearish signal.
When you see the Shooting Star after an uptrend, this is a great sign of a potential market reversal — but before placing any order you should wait for the next candle to open lower than the close of the previous candle.
When you see the Shooting Star after a downtrend, this is a sign of a potential reversal — wait for the next candle to open higher than the close of the previous candle to confirm the Bullish signal.
Criteria of Taking Trades
- The upper shadow should be at least two times the length of its real body.
- The real body should be at the upper end of the trading range.
- The color of the body is not important although a white/green body should have slightly more importance for Bullish signal.
- There should not be a lower shadow or only a very small lower shadow.
- Another candle needs to confirm the Shooting Star signal with a white/green candle & a gap up with a higher close.
- The longer the upper shadow of Shooting Star, the higher the potential of a reversal occurring.
- A little gap up from the previous day's close sets up for a stronger reversal move.
- The candle should be formed at the Resistance zone.