Exact formation
Small body in the upper part, lower shadow at least twice as large and minimal upper shadow.
What is happening in the market
Sellers dominated the session, but buyers recovered almost everything before the close.
Where it matters
After a fall, preferably on support. The same shape after a climb is a hanging man.
How to confirm it
Subsequent close on the hammer's high, better if volume increases.
When it is invalidated
Clear close below bottom shadow end.
Common mistake
Call any candle with a lower tail a hammer without checking the previous trend.