Inverted Hammer: How to Profit from This Candle Pattern?

Have you seen that strange candlestick pattern that looks like an inverted hammer? It could be your golden ticket to catch a trend reversal before it happens.

What is this pattern?

The inverted hammer is basically a signal that the bulls are coming back into the game. It appears at the bottom of a downtrend when:

• Short real body (like a small rectangle)
• Very long upper wick (2x+ than the body)
• Almost non-existent lower wick

This format means that the price was pushed up strongly (the bulls attacking), but closed near the opening. Translation: fierce struggle, and the bulls are gaining ground.

How to use it in practice?

Don't fall for it: A hammer by itself is not a signal to enter. You need confirmation, like:

• Double bottom ( pattern in “W” ) + inverted hammer = aligned signals
• V-shaped bottom + inverted hammer = aggressive buying movement
• Closing above the hammer's high = here comes the explosion

Golden rules:

• Stop loss: 2-3 points below the candle's low
• The longer the upper wick, the better the signal.
• Beware of the shooting star (twin sister that appears at the TOP of the trend = imminent decline)

Pros and cons

✅ Easy to identify on the chart ✅ Interesting return rate ❌ It may fail without prior notice ❌ It may just be a short-term bounce, not a trend.

Summary: Inverted hammer is a useful tool, but never trade in isolation. Use in combination with support/resistance and other indicators. Technical analysis is like a vote: the more aligned signals, the better the chance of getting it right.