For a better understanding of this article, you should already know what Japanese Candlesticks are and all their features; for this reason, we suggest you to read this introductory article to Japanese Candlesticks: Japanese Candlestick Chart ( So that you can understand also the Ratings given to the Candlestick Patterns for the “quality” of the signal and for their frequency to “appear” on Charts).
Let’s analyse now the following Candlestick Pattern: “Inverted Hammer Candlestick”.
Inverted Hammer Candlestick
– Normally it should be a signal of Bullish reversal of the current Trend.
– It occurs during a Downtrend; confirmation is required by the candles that follow the Pattern.
– The Real Body is short, with an Upper Shadow that is very long (It should be at least the double of the Real Body); the Candle hasn’t a Lower Shadow, but if it has a Lower Shadow that’s very short.
– If it occurs near a Low of the Downtrend, it’s a further confirmation of the Pattern.
– The color of the Candle doesn’t matter (Can be white or black).
– Normally before the Inverted Hammer there is a black Long Line (Although it is not necessary).
– It is suggested to analyse the candles that follow the Pattern to better understand the future direction of the Prices. If the prices will fall below the Low of the Candle, that could be a confirmation of the continuation of the current Trend. While if the prices will rise above the High of the Candle, that could be a further confirmation of the reversal of the current Trend.