A small body at the bottom of the range with a long upper wick, appearing after a decline. It shows buyers testing higher for the first time, which needs confirmation.
How to identify it
- Forms after a down move
- Upper wick at least twice the body
- Little or no lower wick
Entry
Buy only after the next candle closes above the inverted hammer body.
Stop loss
Below the low of the inverted hammer.
Target
The prior lower high or nearest resistance.
Invalidation
Price trades back under the pattern low.
Does it work for you?
Textbook reliability means little until you know your own numbers. Tag your inverted hammer trades in TradeZento and it shows your win rate, average win and loss, and P&L per trade for this pattern, so you know whether to keep it in your playbook.