One of the very best Candle patterns is also the simplest to identify. The Hammer looks a little like one, it has a long lower wick/tail/shadow with a small head. Ideally, it is an up Candle, where the close is higher than the open, but that's not vitally important.
There are two important qualifiers. Firstly, it needs to be found in the right place and there also needs to be evidence of involvement. A Hammer is a reversal Candle, but only when it is found after a decline. At number of prior down bars must precede it. The second qualifier is involvement and that can be seen from observing the volume on futures or stocks, or tick activity with Forex charts. The higher the volume plot the better, but it should be at least greater than the average of the last three plus bars. Why is this? read on...
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