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Tue, Jun 10th, 2025
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The Powell Hammer

The Powell Hammer is a candlestick chart formation named by Mr. Rowland in recognition of the unique price action surrounding the events between August 25-26th, 2022.  John Rowland is Barchart's Senior Market Strategist and Head of Trading Education. He hosts weekly webinars for site users, and the "Market on Close" show for Barchart Premier Members.

This article explains what the Powell Hammer is, and how to add it to your own charts.

The Powell Hammer

The market responded to favorable economic data on August 25, 2022, and rallied on the perception that the Federal Reserve was about to pivot. The following day, Chairman Powell said in his speech at the Jackson Hole Summit, "The Fed was intent to raise rates higher and longer." These comments sent the market into a dramatic downturn.

The candlestick formation Mr. Rowland identifies as "The Powell Hammer" consists of two-day bars, the first represented by a small-bodied green candle. The second is a large-bodied red candle. Both should have relatively small upper and lower shadows. The formation represents a sharp reversal of price action and would be referred to as a SUPPLY ZONE, or in this case, a "Rally-Base-Drop."

To properly identify the SUPPLY ZONE, draw a rectangle that encompasses the distance between the low of the first-day green candle and the high of the second-day red candle.

The Powell Hammer

Although individual equities might have slight variations, the two key elements to capture are the dates and the creation of a smaller first-up candle and the second, much larger (engulfing) down candle.

The zone itself has remarkable reliability to act as resistance to the first retest. A number of stock rallies have failed multiple times in the Powell Hammer zone. When a stock is able to penetrate above, it is usually followed by a large impulse move, then when the price retests the "Hammer," it now acts as a level of support, in classic technical analysis chart behavior.

The Powell Hammer

The Powell Hammer

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