Inverted Hammer

Inverted Hammer

The Inverted Hammer is a bullish reversal Japanese Candlestick pattern. In a downtrend, the security opens lower, then trades higher, but closes near where it opened. The candlestick has a long upper shadow/wick and a small real body at the lower end of the session.


The Inverted Hammer appears in a market that opens at or near its low, creating a candle with a small real body. During the day buyers rallied price fairly high, but were unable to sustain the rally.

• Psychology and Confirmation Signals for Bullish Inverted Hammer
In a market characterized by downtrend, bulls are able to rally price up briefly, but not enough to close above the days open. This can be a warning for shorts to anticipate a further, more sustainable bullish rally. The reversal trend is confirmed by bullish moves the next day.

In day-three the higher the candle holds above day-twos body, the more likely the shorts will cover their positions, hence leading to the weakening of a bearish market. Many bottom pickers will start longing the market once that occurs, leading to a bullish reversal. Confirmation for the Inverted Hammer pattern is strongly suggested for this pattern.

The strong bullish Gravestone Doji pattern is similar to the Inverted Hammer pattern, except Gravestone Dojis second day is characterized by a clear doji where open and close prices equal each other, rather than a small body.