The hammer Candlestick
Hammer candlestick are used widely in forex markets. You will find them everywhere. They are rejection candlesticks for support/resistance areas. The candlestick is formed following the below criteria:
- The open and the close are close together.
- If the rejection is on the upside, a long wick will form on the up side.
- If the rejection is on the downside, a long wick will form on the down side.
- The head of the candlestick normally defines the highest price before the change of trend.
You could use a stochastics indicator to verify whether price is over bought or over sold to confirm the trade entry and the direction of the trend.