What is an Inverted Hammer?
The inverted hammer candle is a rising reversal candle that appears at the bottom of a downtrend. It has a long upper tail and no lower tail. The name comes from the shape of a hammer turned upside down.
At first glance, it looks the same as a shooting star. However, appearances are completely different:
| pattern | upper tail | location | signal |
|---|---|---|---|
| Reverse hammer type | Long | Bottom of downtrend | 🟢 Upside reversal |
| Shooting Star | Long | Uptrend high point | 🔴 Decline reversal |
Appearance location is everything. Even if the shape is the same, the signal is opposite depending on the location.
Formative psychology
The inverted hammer-shaped upper tail indicates a strong buying attempt during the day, but is eventually pushed down by the selling force and pushed back near the opening price. At first glance, it looks like a purchase failure, but the key is whether the seller is willing to try again on the next trading day.
If the next inverted hammer candle opens as a gap-up candle, it signals that the selling forces have completely given up, which is a strong upward signal.
Conditions for increasing reliability
Checklist:
- Appears at the bottom after a downward trend
- The upper tail is more than twice the size of the body
- The tail below [ ] is missing or very short.
- Next candle closes as a gap-up candle ← Most important
- RSI below 30 (oversold range)
- Near the main support line
Comparison of hammer type vs. reverse hammer type
| Compare | hammer type | Reverse hammer type |
|---|---|---|
| shape | Bottom tail is long | upper tail long |
| signal | 🟢 Upside reversal | 🟢 Upside reversal |
| Reliability | ⭐⭐⭐⭐ | ⭐⭐⭐ |
| confirmation bong | need less | Required |
Reason why the hammer type is more reliable: In the hammer type, there is clear evidence (lower tail) that buying forces have already driven up the price, but in the reverse hammer type, there has been an attempt to buy, but the results are uncertain. Therefore, checking the next bar is much more important.
Futures trading long strategy
Method A (conservative recommended):
Entry: Inverted hammer type Open after the next candle is confirmed as a candle
Stop Loss: Below the inverted hammer low price
Target: Immediate resistance line
Method B (Active):
Entry: Just above the inverted hammer closing price
Stop Loss: Below the inverted hammer low price
Target: Immediate resistance line
※ If the direction of the next bar is different from expected, stop loss immediately.
Failure case
Inverted hammer pattern: If the next bar closes with a bearing candle or starts with a gap down, the pattern is invalid. Stop loss immediately.
Related guides
- Complete explanation of hammer candles →
- Shooting Star candle (same shape, opposite location) →
- Dragonfly Doji →
- Liquidation price calculator →