The Inverted Hammer forms at the bottom of a downtrend, with a small body and long upper wick. This pattern shows that buyers attempted to push prices higher, but sellers ultimately brought them back down by the close. The Inverted Hammer is an early sign of buyer interest, hinting that a trend reversal may be underway if subsequent candles confirm the shift.
Interpreting the Inverted Hammer helps traders understand where sentiment may be shifting from bearish to bullish, often marking the beginning of a recovery. Recognizing these patterns takes practice and familiarity with market conditions. With The Chart Guys’ resources, traders can deepen their understanding of such reversal signals and learn how to incorporate them effectively into their trading strategies.
