The Ultimate Guide to Inverted Hammer Candlestick Patterns

Last updated: January 4, 2024

Inverted Hammer Pattern

The inverted hammer pattern can indicate a bullish reversal after a bearish run, which appears just like an upside-down hammer:

This pattern shows that the market couldn't sustain the highs seen throughout the trading day with the stock closing near the session's open.

General Identification & Interpretation

Steve Nison is credited with bringing Japanese candlestick charting to the West. In his book "Japanese Candlestick Charting Techniques" he describes inverted hammer patterns with the following characteristics:

Typical characteristics

• Small candle body with longer upper shadow, resembling an upside-down hammer
• Minimal (to zero) lower shadow
• Upper shadow more than twice the length of the body

Examples of use as a trading indicator

• Potential reversal signal

More for beginners

Check out our quick start guide to candlestick charting for more information if you are new to candlestick charting!