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Inverted Hammer Pattern

A bullish reversal candlestick with a small body at the bottom and a long upper wick, appearing at the end of downtrends.

Quick Answer

A bullish reversal candlestick with a small body at the bottom and a long upper wick, appearing at the end of downtrends.

What Is the Inverted Hammer Pattern?

The Inverted Hammer is a bullish reversal pattern that forms at the bottom of a downtrend. It has a small real body near the low of the candle and a long upper shadow (at least twice the body length). Despite looking bearish, it signals that buyers attempted to push prices higher, and when followed by bullish confirmation, it can signal a trend reversal.

How the Inverted Hammer Forms

  1. 1Small body near the low of the candle
  2. 2Long upper shadow (2x body length minimum)
  3. 3Little to no lower shadow
  4. 4Forms after a downtrend

How to Confirm the Pattern

✓Appears at support level
✓Following candle closes above inverted hammer body
✓Gap up on next candle adds strength
✓Volume increases on confirmation

Best Timeframes for Inverted Hammer

1H4HDaily

How to Trade the Inverted Hammer

  • →Identify potential bottom reversals
  • →Time long entries after confirmation
  • →Set stops below inverted hammer low
  • →Combine with support levels

Common Mistakes to Avoid

✕Trading without confirmation candle
✕Ignoring the prior downtrend requirement
✕Confusing with shooting star
✕Not waiting for close above body

Detect Inverted Hammer Automatically

VaultCharts automatically detects Inverted Hammer patterns on your charts. No manual analysis needed - the pattern is highlighted with entry zones and targets.

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