Bullish reversal1 session

Sellers pushed price well below the open and lost all of it by the close. One session that says the level underneath was defended.

The shape: Small body near the high, lower wick at least twice the body, almost no upper wick

A hammer is a session that traded far lower than it finished. The long lower wick is the whole pattern: price fell, found buyers somewhere down there, and closed back near where it opened. The body can be green or red — what matters is the distance between the low and the close.

The story is about who ran out of conviction. A market that falls all day and closes on its low has sellers still in control at the bell. A market that falls all day and closes at the top of its range does not.

The chart marks a hammer only when the shape sits at a level worth defending — a support zone or the low of the recent window — and only after a decline of at least 2% over the prior five sessions. A hammer in the middle of a quiet range is a shape without a story, and marking it would bury the ones that matter.

Look at where the low is relative to everything around it. A hammer that pokes below a support zone the chart already drew and closes back above it is the version traders actually watch: the level was tested and rejected inside a single session.

The next session is the confirmation. A close above the hammer's high says the rejection held; a close below its low says the level did not, and the hammer becomes just another bar on the way down.

Volume is the honest tiebreaker. A rejection on heavy volume means real money changed its mind at that price. On thin volume it can be nothing more than a quiet session with a wide spread.

On the chart: a triangle below the bar for a bullish reading, above it for a bearish one, a diamond for indecision. Hover any mark to see the pattern and what qualified it — the level it formed at and the move it followed.

A hammer at a support zone is the arrival of the condition a put seller usually waits for: price has already fallen, the level below has been tested, and implied volatility is typically still elevated from the decline that produced it.

The level under the wick is the reference. A cash-secured put struck at or below that low means the market has to break the price it just rejected before the strike is in question — and that low is a visible, dated place to watch rather than a round number.

If you already hold shares from an earlier assignment, a hammer at support describes conditions where the immediate downside pressure has paused. What that means for a covered call is entirely a function of your basis, not of the candle.

Like everything in this guide, these are descriptions of conditions and reference levels — context for your own decisions, not instructions to trade.