Rules of Hammer’s recognition: - The long lower shadow – at least 2 times longer (3 times or more is preferable) than the body; - Little or no upper shadow; - The body is at upper end of the candle (in fact it couldn’t be otherwise, due to previous conditions); - The color of the body is not important, but a white hammer is preferable. - Hammer also could be a Doji with the same properties (chart #2). #2 GBP/USD Weekly – Shooting star and Inversed Hammer: Hanging man, in fact, has absolutely the same properties, but in terms of bearish reversal pattern. Its appearance after up trend suggests that here could be a top or resistance level. Pipruit: Commander and what are the price mechanics of a Hanging man? Looks like the same action on a Hammer as on a Hanging man, buyers dominate over sellers. Why then is a Hanging man a bearish reversal pattern? Commander in Pips: Good question. Imagine a good up move, so that the market is forming nice white up candles. But once, a Hanging Man has appeared. What does it mean? Although buyers have return to their positions during this period and have pushed the bears back – they could do it only until the open price and weren’t able to continue the up move, i.e. establish the next nice white candle. Hence, a Hanging Man gives us an early warning, that Buyers are gradually becoming exhausted, so the pressure of bears becomes stronger. Pipruit: Sounds logical.