Inverted Hammer Candlestick Pattern

Inverted Hammer candlestick patterns are very strong bullish reversal candlestick patterns.

Requirements

Following are the requirements for an Inverted Hammer candlestick pattern.[s2If !current_user_can(access_s2member_level1)]…..

If you are interested in reading more about Inverted Hammer candlestick patterns, you must first login. Trendy Stock Chart members can access the requirements, characteristics, support areas and trading strategies for Inverted Hammer candlesticks.

If you are not a Trendy Stock Charts member, consider subscribing today. There are several different subscription plans available.[/s2If][s2If current_user_can(access_s2member_level1)]

Characteristics & Observations

Listed below are some of the other characteristics for Inverted Hammer candlestick patterns, as well as some of my personal observations for them.

Since Inverted Hammer candlestick patterns are bullish reversal candlestick patterns, once it is identified consider starting the process of purchasing shares and scaling-into a long position, especially if the candlestick pattern is accompanied by heavier than normal buying volume or a capitulating volume spike

Like all Doji candlestick patterns, when Inverted Hammer candlestick patterns develop it is extremely important to immediately analyze the stock’s chart to determine where the stock’s share price may be in the trend of one larger degree; the trend of one larger degree is discussed in more detail on the Doji candlestick pattern webpage.

Analyzing the trend of one larger degree may help you determine the amount of support the share price may see on any subsequent attempts to break below the support area from an Inverted Hammer candlestick pattern.

Support Area

The very bottoms of Inverted Hammer candlestick patterns are the support areas.

As with any type of support area, whether it’s from a trendline, a moving average line or a candlestick pattern, a support area is negated when a stock or index’s share price closes below the support area.

So in order to negate the support area an Inverted Hammer candlestick pattern, a subsequent candlestick must close below the very bottom of the candlestick’s real body since Inverted Hammer candlestick patterns do not have lower shadows; in order to accomplish this, typically the share price will need to see a trading period that includes extremely heavy selling volume to not only break below the strong support area, but to also close below it and negate its effects.

Bearish Counter-Part

The bearish counter-part to an Inverted Hammer candlestick pattern is a Shooting Star candlestick pattern.

Similar to most other bullish and bearish counter-parts, the main difference between Inverted Hammer candlestick patterns and Shooting Star candlestick patterns is where the patterns develop in the trend for the stock’s share price.

Inverted Hammer candlesticks develop at the bottom of downtrends whereas Shooting Star candlesticks develop at the top of uptrends.