The candlestick pattern we will be evaluating in this article is a “hammer.” Hammers are bullish reversal or continuation signals. When they follow a downtrend or a downside correction within a larger uptrend it is wise to pay attention.
Dojis are usually considered trend neutral when viewed all by themselves but they do indicate trader indecision and a lack of momentum. That means that the market context within which the doji appears is very important.
Stock and futures charts will create gaps when the market moves before trading opens each day. These gaps can create very useful trading signals for active traders.