A small body sitting at the top of a long lower wick. Price fell hard during the session and buyers took the entire decline back before the close — a single day where the selling ran out.
The lower wick should be at least twice the height of the real body, with little or no wick above. The body's colour matters less than the shape: what you are reading is that the day's low was rejected, not where it happened to close.
A hammer needs a decline behind it. After a fall, it marks a session where sellers pressed and could not hold the ground they took. The same shape in the middle of a range is just an ordinary volatile day.
Because it is a single candle, confirmation matters more here than with multi-day patterns. Volume above the 20-day average suggests the recovery involved real buying rather than a thin afternoon bounce.
The most common failure is a hammer forming partway into a decline rather than at the end of one. Falling stocks produce many intraday recoveries; only the last one marks a bottom, and there is no way to know which it is at the time.
It also fails when the long wick comes from a brief liquidity gap — a large sell order filled into a thin book, then reversed — rather than sustained buying. Low turnover on the day is the tell.
A hammer says nothing about how far a recovery might run. Many resolve into a few days of sideways trade rather than a reversal, which is why the following session's close matters more than the candle.