A Hammer is a bullish reversal pattern formed by one candle.

It has a short body at the top and a long lower wick. That is, its opening, closing, and maximum are very close to each other. However, the minimum is relatively far from them.

Commonly found during downtrends, its long lower wick suggests that the demand has strongly rejected the price when it tried to continue its way downwards. Then, suggesting that the demand is very present at that price and that it can reverse its trend.

Usually, a Hammer precedes an upwards trend reversal or pullback. Therefore, whenever it appears in a chart, it implies that the price is likely to increase and can be interpreted as a buy signal. Also, it can be easily combined with other indicators to reinforce the entry points.