Inverted Hammer Candlestick Pattern

What the Inverted Hammer pattern means

The long upper wick shows buyers attempted to push price up strongly before sellers pulled it back. After a downtrend, that buying attempt signals shifting sentiment. It is weaker than a hammer and relies heavily on the next candle confirming with a strong close higher.

How the Inverted Hammer is traded

• →Require a strong bullish confirmation candle the next period before entering.
• →Most reliable at support after an extended decline.
• →Stop goes below the inverted hammer's low.
• →Do not confuse it with a shooting star, which looks similar but appears after an uptrend.

Common mistakes

• ✕Confusing it with a shooting star by ignoring the prior trend.
• ✕Entering without the confirming candle, since it fails often on its own.