What is Long Lower Shadow Patterns?

The Hammer pattern, also known as Long Lower Shadow Patterns, is a candlestick pattern that appears in a downtrend with a long lower shadow and a small body located near the top of the candle’s range. The body of the candle is generally red or green and has a short upper shadow, while the lower shadow should be at least two to four times the length of the body. The Hammer is a signal that the downtrend may be ending.

Characteristics of a Hammer Pattern:

• Occurs in a downtrend.
• The small real body is located near the top of the candlestick, with both the high and close prices at or near the top of the candlestick, and the open price just below the high. The color of the real body (red or green) is not important.
• There should be little to no upper shadow, but if there is one, it must be very short. Generally, the lower shadow should be 2-4 times the length of the real body.
• The longer the lower shadow, the shorter the upper shadow, and the smaller the real body, the more effective the candlestick pattern.

A hanging man and a hammer have opposite characteristics. A hanging man has a long lower shadow and a short real body, and if the real body disappears, it becomes a T-line. Therefore, T-lines are largely similar to hanging man patterns. However, this similarity is slightly inferior to that between hammer and inverted T-lines. The focus of a hammer is on the upper shadow, while the hanging man’s lower shadow is important, and the real body also has significance. Since the T-line has no real body, its practical and predictive significance is slightly lower than that of a hanging man.

Application strategy:

The hammer pattern is a strong signal for a bottom reversal. If a hammer pattern appears on a chart of consecutive falling bearish candles, it likely indicates a reversal in the market. Investors can tentatively long the security and gradually add to their position as the market gives further confirmation signals.

See the example chart below：