Similar to the hanging man, the inverted hammer is a bottom reversal pattern and is best played at swing lows. This formation is second only to the pin bar in the potential strength and setup of a possible change in trend. They typically have the following characteristics:
- The upper shadow should be twice the length of the real body.
- The lower shadow will be small or non‐existent.
- Best to wait for confirmation on the following candle.
The inverted hammer shows that price met with strong buying in the market but was pushed back down by sellers.
It does not carry as much strength as a pin bar and this is why it is recommended that you wait for bullish confirmation on the following candle.
Loading ...
Comments on this entry are closed.