Hammer and shooting star
The hammer and the shooting star are reversal candles: a small body and a shadow at least twice as long as the body, below or above.
The hammer appears after a decline: during the session the price falls a lot but then buyers push it back up, leaving a long lower shadow. The shooting star is the mirror image after a rise, with a long upper shadow: sellers rejected the attempt to climb.
How to spot it
Small body (the distance between open and close) relative to the whole candle; lower shadow (hammer) or upper shadow (shooting star) at least twice the body; opposite shadow almost absent. It must appear after a trend: a decline for the hammer, a rise for the shooting star.
Worked example
After a week of decline, a stock opens at €30, falls to €28 and closes at €30.30. The body is €0.30, the lower shadow €2, more than six times the body: it's a hammer.
How to read it
A single candle is a weak signal: it's best to wait for confirmation in the next session, for example a close above the hammer's high.
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