From Traderpedia

A hammer candlestick will occur at the bottom of a downtrend. It should have a shaven head (no upper shadow), but with a tail (lower shadow) at least two to three times the length of the real body. For the hammer the colour of the body does not really matter, though it is believed that it is better for it to be clear, indicating positive pressure.

The hammer will ususally signify the end of the downtrend and this is even more certain when the hammer occurs at or near a line of support, thus the term 'hammering out a base'.