Candle stick patterns have long been a powerful trading tool used by the professional traders. The “Hammer” when used in conjunction with significant support and high volume can provide an entry point for a reversal trade.

The name of this candle comes from the way it looks, much like a hammer. A green hammer found at the bottom of a trend is considered a Bullish Signal.

(click on images to enlarge)

This hammer was found on OST on the 20^th October 2008. OST not only produced a hammer, but it fell on the cross section of a significant weekly support line and a long term up trend line that started in September 2001.

 

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