-Hammer candlesticks typically occur after a price decline. They have a small real body and a long lower shadow. -The hammer candlestick occurs when sellers enter the market during a price decline. By the time of market close, buyers absorb selling pressure and push the market price near the opening price. -The close can be above or below the opening price, although the close should be near the open for the real body of the candlestick to remain small. -The lower shadow should be at least two times the height of the real body. -Hammer candlesticks indicate a potential price reversal to the upside. The price must start moving up following the hammer; this is called confirmation.