Inverted Hammer
A small body at the bottom of the range with a long upper wick, appearing after a downtrend as a tentative reversal signal.
Anatomy
An inverted hammer has a small real body near the low of the candle and a long upper wick at least twice the body, with little or no lower wick. It looks like a shooting star but appears after a decline rather than a rally.
Market psychology
Buyers attempted to push price much higher during the session and were partly rejected, but the willingness to bid up — after a downtrend — hints that selling pressure is fading.
When it matters
It matters after a clear downtrend, ideally near support. Because the close is still near the low, it is weaker than a hammer and almost always needs a strong follow-up green candle to confirm.
Common beginner mistakes
- Confusing it with a shooting star — the same shape is bearish after an uptrend and only tentatively bullish after a downtrend.
- Acting without confirmation; an inverted hammer alone is one of the weaker reversal signals.
Frequently asked questions
Is an inverted hammer bullish or bearish?
It is a tentative bullish reversal signal, but only when it appears after a downtrend. The identical shape after an uptrend is a bearish shooting star — context decides the meaning.
Do I need confirmation for an inverted hammer?
Yes, more than most patterns. Because the close finishes near the low, you generally wait for a strong green candle the next session before treating it as a reversal.
Reveal real historical charts one candle at a time and practice recognizing this pattern in context.