Inverted Hammer Candlestick Pattern
The Inverted Hammer is single reversal Candlestick Pattern of Bearish form.
The Inverted Hammer is a Bearish single reversal Candlestick Pattern. Formed in an up-trending market it signifies a reversal in price action. The appearance of an Inverted Hammer is similar to that seen of an upside-down hammer. Examples of the Inverted Hammer Candlestick Pattern can be seen below;
The colour of the hammer and whether the market had close at a higher or lower point that the open is not a criterion for this pattern (both are accepted). The Candlestick's presence relies on an up-trending market, if not present in a rising market it cannot be defined as an Inverted Hammer. The body of the Inverted Hammer will be fairly small in size and positioned towards the bottom of the periods range. The lower wick will be relatively small and often very little to none in size. The upper wick will be large in size and at least double in size to that seen of the body. Another important criterion when identifying a Hammer candlestick pattern is for the following candlestick to show an increase in price and a larger traded volume.
Also note that the presence of an Inverted Hammer Candlestick does not guarantee a downward trend, being said it can act as a confirmation tool when used with other metrics or a complimentary piece of information. To summarise the above, conditions for the Inverted Hammer Candlestick have been listed below;
• The market is in a current uptrend.
• The body of the Hammer is relatively small and towards the bottom of the range.
• The upper wick is at least double the length of the Candlesticks body.
• The lower wick is small in size, often very little to none.
• An increase in price seen in the following Candlestick, accompanied with a larger traded volume.