What Is Inverted Hammer?
An Inverted Hammer has the same shape as a Shooting Star — small body near the low, long upper wick, little or no lower wick — but it appears at the bottom of a downtrend rather than the top of an uptrend. Context is what distinguishes the two patterns.
The interpretation: during the session, buyers attempted a strong rally but sellers absorbed the move and pushed price back down. While the candle closes near its low (initially bearish), the rally attempt signals that buyers are starting to challenge the downtrend.
An Inverted Hammer requires confirmation — a bullish follow-through candle in the next session. Without confirmation, it's just an indecision signal. Combined with oversold RSI, a key support level, or a divergence pattern, it can mark a meaningful bottom.
Related terms
- Hammer Candlestick — A bullish reversal candle with a small body and long lower wick, appearing at the bottom of declines.
- Shooting Star — Bearish single-candle reversal pattern with a long upper wick at the top of an uptrend.
- Candlestick Chart — Price chart format where each candle shows open, high, low, and close for a period.
- Support and Resistance — Price levels where buying or selling pressure historically halts price movement.