A hammer is a bullish reversal signal that can only happen during a downtrend. It is arguably one of the top-two most important candlestick patterns, tied with the shooting star. 

<Hammer candlestick pattern retrieved from thinkorswim mobile>

We have a hammer when there is a sharp flush down but the candle closes green. And if a candle is finishing strong after a deep flush, then it can be a promising sign of a reversal to the upside. The inverse logic also applies to shooting stars, which flush up with a tall wick but then finish down and in the red.

<Shooting star pattern retrieved from thinkorswim mobile>

The longer the wick on the hammer or shooting star the stronger the reversal signal. Its price action is tied to the logic of a flush: After the last of the sellers are flushed out, there are only buyers and no one left to sell. Momentum ignition can often come as a result of this.