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Trading signal: the Hammer Blast identifies a rebound
The Hammer Blast pattern occurs at the end of a down-trend. It often reflects a change in the sentiment of the market. The pattern works well for market indices (DAX, DOW…) and individual stocks.
|: Hammer candlestick pattern
|Usable for buy signals
|Usable for short sell signals
When to open a position?
As soon as the Hammer pattern is confirmed by the termination of the fourth candle a long position is bought at the market price. The Hammer pattern does not provide short sell signals.
This example shows a Hammer pattern on the S&P 500 chart in a 60-minute time frame.