I just noticed that many new traders do not understand the hammer candle well, so I wanted to share what I have learned in the market.

Basically, this hammer candle is that formation you see right when an asset has dropped significantly and is hitting bottom. The pattern is quite recognizable: you have a small body (it can be green or red, it doesn't matter much) and what makes it special is that long lower shadow, at least twice the size of the body. There is almost no shadow at the top or it is minimal.

What’s interesting is what it signifies: after a strong decline, buyers start to come in and push the price upward, but then the market resists a little. That is exactly what you see on the chart. The hammer candle is telling you there is buying strength, that something could change.

You see it a lot in cryptocurrencies, especially when a token is oversold or has hit an important support level. I have seen it work well in those critical moments.

Now, something important: do not confuse the normal hammer candle with the inverted hammer. The latter has the long shadow upward, not downward. They are opposite in a sense.

My advice after trading with this for a while: don’t trade solely based on this hammer candle. You need confirmation. Look at other indicators, check the volume, observe if the price actually bounces in the following moves. Trading always involves risks, so combine this tool with what you already know about the market. The hammer candle is useful, but it is only part of the analysis, not the complete solution.