Technical Glossary / Candlestick Patterns
Inverted Hammer
A small body at the bottom of the range with a long upper wick, after a decline.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
After a downswing, an inverted hammer probes higher and closes back near the low of that probe. The upper wick is at least about twice the body. The lower wick is small. It shows buyers tried, but the close did not yet prove they won. The same shape after an upswing is a shooting star.
How to identify it
Falling prices into the bar. Small body near the low, long upper shadow, little lower shadow.
Bullish reading
The bullish case needs confirmation: a later close above the inverted hammer's body or high. Without that, the long upper wick is a failed rally.
Bearish reading
If price cannot clear the high and then breaks the low, the probe up was sold. That is continuation of the decline, not a reversal.
Common mistakes
Treating it as more bullish than a hammer. The close is weak. The hammer already closed back up. The inverted hammer has not.
Limitations
Confirmation is not optional for this pattern. The shape alone is ambiguous by design.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.