Crypto glossary
Hammer and shooting star
A hammer is a candle with a small body and long lower wick that hints at a bottom; a shooting star is its inverse, with a long upper wick near a top.
A hammer forms when sellers push price well below the open during the period, but buyers drive it back up to close near the high. The result is a small body at the top of the candle and a lower wick at least twice its length. It is read as a potential bullish reversal when it appears after a decline. The same shape after a rally is called a hanging man and is read as a warning.
A shooting star is the mirror: buyers push price far above the open, but it closes near the low, leaving a long upper wick and a small body at the bottom. After an advance, it suggests buyers are being rejected. An inverted hammer has the same shape as a shooting star but appears after a decline.
In crypto, these candles often mark liquidity grabs, where price sweeps stops and snaps back. They are more meaningful on higher timeframes and at known support or resistance, and traders usually wait for the following candle to confirm the reversal.
Example
After a three-day selloff, ETH dips to 2,450 dollars intraday but closes at 2,690, forming a hammer at a known support level. The next day opens higher and the bounce continues.