Hammer formation on oil

WTI oil accelerates its bearish momentum at the beginning of today’s session and drops very fast to the 44.00 zone after breaking below the 47.00 level during yesterday’s session as shown on the daily chart. After touching the 44.00 level, the price of WTI oil bounces suddenly to the upside and reaches the 45.42 level, forming what it appears to be a hammer pattern. The hammer is a bullish reversal Japanese candlestick pattern that forms when there is a fast drop in the price of the asset and then a bounce to the upside during the same period of time that the candle is measuring. Once the price goes back up, it comes very close to the same level where the candle opened, indicating that there is indecision in the market. But the long lower shadow that is left on the candle is showing us that the bulls have taken control of the market and are trying to take the price higher. If the following candle is bullish, then the pattern is confirmed and most likely we will see a change in direction. In case the price of WTI oil keeps pulling back to the upside, then the 47.00 level may act as a resistance. To the downside, if the price goes back down, the 44.00 level may act as support.