Hammer — what it is and how to use it in trading
Definition
A Hammer is a candle with a small body near the top of the range and a long lower wick (at least twice the body length). Appearing at the bottom of a downtrend signals that sellers pushed price down but buyers took control by the close.
How it works in the builder
hammer is a boolean operand with no parameters: it checks the ratio between the body size and the lower/upper wick of the current candle, with no analysis of previous bars.
What it looks like on the chart
Visually it resembles a hammer or the letter T — a short body up top, a long "handle"-wick below. Context matters: the pattern is flagged technically on any candle of this shape, but is read as a reversal signal only after a decline.
Typical use
A reversal signal at the bottom of a trend. Typical condition: hammer == 1 after a run of falling candles, often confirmed by an oscillator (e.g. rsi(14) < 30) or a support level.
Common pitfalls
The builder recognizes the candle's shape but doesn't "know" about the preceding trend — without an explicit extra condition (such as price below an EMA or RSI in the oversold zone), hammer also fires in the middle of a range, where no reversal is implied at all.
This block is available in the strategy builder
137 no-code blocks — build an entry condition with this term and test it on history
Historical results do not guarantee future ones. The service is an informational and analytical tool, not an individual investment recommendation; trades are not executed.