Date: 26-Oct-26
Inverted Hammer Candlestick
The Inverted Hammer is a potentially bullish reversal candlestick pattern that usually appears after a downtrend. It suggests that buyers are beginning to challenge sellers, but the pattern needs confirmation before you consider a trade.
Characteristics:
An Inverted Hammer has these characteristics:
- Long upper shadow: at least 2 times the real body.
- Small real body: near the bottom of the candle’s total range.
- Little or no lower shadow.
- Location: appears after a downtrend, ideally near support.
The candle can be either green or red. Its location and subsequent price action matter more than its colour.
Criteria to find right Inverted Hammer:
It can be formed anyplace in the candlesticks chart. But we need to focus only on those Inverted Hammer which are following following criteria:
- Inverted Hammer should be formed after 5- or more downtrend candles or at least 15% down
- Color doesn’t matter for Inverted Hammer, it can be red or green.
- Lower wick must be very tiny or absent
- After Inverted Hammer, Next candle closing price should be above than Inverted Hammer closing price, this candle is called confirmation candle
- Color doesn’t matter for confirmation candle, it can be red or green.
- Sell should be closed price of the next candle or little down- depend on the loss capacity
- Stop loss would be apply below the wick of Inverted Hammer or opened price if there is no down wick
- Set Stoploss once next candle closed
Disclaimer: The information provided here is for educational and informational purposes only and should not be construed as financial, investment, or legal advice. Always do your own research and consult with a SEBI-registered financial advisor before making any investment decisions. Investments in the financial markets are subject to risks, including the risk of loss of principal.
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