You confirm a hammer candlestick when the next candle closes above the hammer's high, ideally with above-average trading volume and near a recognized support level. A significant increase in trading volume during the formation of the hammer suggests stronger confirmation, since higher buying volume indicates heightened interest reinforcing the potential reversal
. An RSI reading below 30 in oversold territory adds further validation by signaling selling exhaustion and a potential reversal
. Without that follow-through close, the pattern remains a warning, not a trade trigger.