Hammer
/ Dragonfly Doji Bullish
Pattern:
Reversal
Trend: Bullish
Reliability: Low/Moderate
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How to
Identify it
- Small real body at the
upper end of the trading range
- Lower shadow at least
twice as long as the real body
- No (or almost no)
upper shadow
What it
Means
There is a sharp sell off
after the market opens during a downtrend. However, by the
end of the trading day, the market closes at or near its
high for the day. This signifies a weakening of the previous
bearish sentiment, especially if the real body is white (the
close is higher than the open price). Since the certainty
for a Hammer indicator is low, the trend reversal can be
confirmed by a higher open and an even higher close on the
next trading day. If the open and the close are identical,
the indicator is considered a Dragonfly Doji. The Dragonfly
Doji has a higher reliability associated with it than a
Hammer.
