Technical Analysis · Bullish Reversal
Inverted Hammer
An Inverted Hammer is a bullish reversal candle that forms after a downtrend, with a small body near the bottom of the range and a long upper wick.
Bullish candle
Bearish candle
Highlighted = the pattern itself
Category
Bullish Reversal
Signal
Buy
Reliability
★★★★★
Candles Involved
1
What does it signal?
Buyers attempted to push price higher during the session and largely failed to hold those gains by the close, but the attempt itself signals fading downward momentum.
How to identify a Inverted Hammer
- Forms after a downtrend.
- Small body sits in the lower third of the candle's range.
- Upper wick is at least 2x the body length.
- Little to no lower wick.
How to trade a Inverted Hammer
- Requires bullish confirmation on the next candle — it's a warning sign, not a standalone buy trigger.
- Stop-loss is typically placed below the Inverted Hammer's low.
Educational only — not financial advice. Combine any candlestick pattern with broader market context, risk management, and your own trading plan.
FAQ
Common questions
It's generally considered slightly less reliable, since the failed push higher is a weaker signal than the Hammer's strong rejection of lower prices.
No — wait for the next candle to close bullish above the Inverted Hammer's body to confirm the reversal.
Related