Bullish Hammer Pattern

by · December 31, 2009

BULLISH HAMMER PATTERN (BHaP)
the short traders feel increasingly uneasier with their bearish position

Characteristics:
1. Market is on a prevailing downtrend;
2. We then see a small body at the upper end of the trading range;
3. It is preferred that the lower shadow is at least twice as long as the body; and
4. There is no upper shadow (or almost no upper shadow).

Brief Explanation:
The BHaP is a significant stick that is seen at the bottom of a trend (or during a downtrend). It is called a hammer since it is hammering out a bottom. This pattern is similar to the Bullish Dragonfly Doji Pattern (BDDP). In the BDDP case, the opening and closing prices are the same while the BHaP has a small body at the upper end of the trading range.

Notes:
1. If the hammer is distinguished by a close above the open, the situation is even better for the bulls
2. The BDDP is more bullish that the BHaP.