What is the Inverted Hammer candlestick?
Inverted Hammer is a reversal bullish candlestick (means it appears at the end of the down market (downtrend) and changes its direction into an uptrend).
How does the Inverted Hammer look like?
Inverted Hammer has a long upper wick (upper shadow or upper tail), an average-sized body and a very short lower wick, or no lower wick at all.
Inverted Hammers can be either of red or blue color.
Where do Inverted Hammer Candlesticks appear?
Inverted Hammer candlesticks appear at the end of a downtrend and turn it into an uppertrend. Therefore, they are reversal candlesticks.
What should you do when you see an Inverted Hammer?
Inverted Hammer is a bullish candlestick, means that you should expect the market to go up when you see it ending a downtrend.
However, you can’t get yourself in a trade just because of the Inverted Hammer though it is really a strong candlestick pattern. You still need to have more than one sign, such as a moving average, indicator, Fibonacci retracement etc.
Needless to say, wait for the candle to close before judging what kind of candlestick it is.