The inverted hammer also forms after a downtrend but has a long upper wick and a small body near the bottom of the range. Buyers tested much higher prices during the session before sellers pushed the close back down.
While the close is weak, the long upper wick shows buyers are becoming active. When the following candle confirms with a strong green close, it often marks the start of a bullish reversal.
▶ Practice the Inverted Hammer pattern free →Wait for a bullish confirmation candle, enter above it, and keep a stop-loss below the inverted hammer's low. Confirmation and location at support matter more than the single candle alone.
See all patterns in our candlestick patterns guide, or compare it with related patterns like shooting star, hammer, bullish engulfing. Or jump straight into the free trainer to test yourself.