Inverted Hammer candlestick chart pattern formation

What is Inverted Hammer candlestick chart pattern formation?

Inverted Hammer candlestick chart pattern usually occurs after a sell off. The opening price and closing price are near the day’s low and upper shadow is long .The price opens low and then buyers comes in and then drive the price all the way up, then sellers come in and make the price close at or near day’s low. Inverted Hammer is usually a bullish reversal pattern and probability of its success depends on the next day price action. Like any other pattern the bullish move is only confirmed if the succeeding candle opens higher and closes positively. Once the low of inverted hammer candle gets violated then this pattern is nullified.

Look out for inverted handle candlestick chart pattern formation near congestion areas like supports, breakouts, near important pivot points, Fibonacci levels and near critical moving averages like 21,34,50,63,100,200 etc. Formation near such areas increases the probability of reversal.

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