Hammer Candlestick Pattern: The Same Shape as a Hanging Man
A hammer is a small body at the top of the range with a long lower wick, appearing after a decline. Exactly the same shape after a rally is a hanging man and means the opposite - which is why location, not shape, is the lesson.
A hammer is a candle with a small body near the top of its range and a long lower wick, at least twice the body, forming after a decline: lower prices were rejected. The identical shape after a rally is a hanging man and reads the opposite way. Confirmation is usually the next candle closing above the hammer's high.
Hammer or hanging man?
Open XAUUSD on the H1 in our charting desk and look for it on real, current price - the same thing this page describes, on a chart that is moving. It is a free preview of the real desk, and a free guest account is required to open it: put in your email, we send a login code, and you are on a live chart in under a minute. The preview runs real market data with one indicator at a time - nothing is saved and no broker is connected. A preview of the product, not advice.
Open the live chart →What a hammer is
A candle with a small real body near the top of its range and a long lower wick, ideally at least twice the body, with little or no upper wick. It forms after a decline. The shape says price was driven down during the period and bought all the way back - lower prices were rejected.
The three lookalikes
| Candle | Shape | Where | Reads as |
|---|---|---|---|
| Hammer | Small body top, long lower wick | After a decline | Lower prices rejected |
| Hanging man | Identical | After a rally | Sellers appearing |
| Inverted hammer | Small body bottom, long upper wick | After a decline | Buyers testing higher |
| Shooting star | Identical to inverted hammer | After a rally | Rally rejected |
Two shapes, four names, and the only difference is the trend that preceded them. That is what the drill above tests, because it is the mistake that actually costs money.
The hammer/hanging man trap is best unlearned on charts that cost nothing. Chart Bound replays real tape, free.
Play free, no signup →Confirmation
On its own a hammer is a candle, not a signal. The usual confirmation is the next candle closing above the hammer's high, and the strongest context is a hammer forming at a level you had already marked - see supply and demand zones or a swept low. The stop generally sits below the wick, which also sets the position size: the longer the wick, the smaller the position.
When it fails
- In a strong downtrend, where hammers form repeatedly on the way down.
- Mid-range, with no level beneath it - the wick rejected nothing in particular.
- When the next candle closes below the hammer's low, which invalidates it outright.
- On a low timeframe in thin hours, where a single quote can draw the wick.
- When the stop is too far for the trade to make sense at a sane position size - a valid pattern is not a valid trade.
Frequently asked questions
What does a hammer candlestick mean?
That price was pushed well below the open during the period and bought back before the close, leaving a long lower wick. After a decline it reads as rejection of lower prices.
What is the difference between a hammer and a hanging man?
Nothing in the shape. A hammer appears after a decline and reads as bullish rejection; the identical candle after a rally is a hanging man and warns that sellers are appearing.
Does a hammer need confirmation?
Usually the next candle closing above the hammer's high. Without it, the candle is just a wick.
Where does the stop go?
Most traders place it below the hammer's low. A long wick means a wide stop, which means a smaller position for the same money at risk.
Embed this calculator on your site
Free to use, on any site, with no signup: paste this one line where you want the tool to appear. It loads our hosted version, so it stays up to date, and the link under it credits back to this page.
420×620 by default and it scales down to fit a narrower column. Please keep the attribution link.
Keep learning
The hammer/hanging man trap is best unlearned on charts that cost nothing. Chart Bound replays real tape, free.
Play free, no signup →