Inverted Hammer in Forex

An inverted hammer is a single-candle shape with a small real body near the lower part of the candle and a long upper wick.

Its name is normally used when the candle appears after a decline, where it can signal that buyers attempted to regain control even though confirmation is still needed.

How to Recognise It

The body should be relatively small and positioned near the candle's low.

The upper wick should be clearly longer than the body, while the lower wick is usually small or absent.

The same basic shape after an advance is more commonly called a shooting star, which shows why context matters to candlestick names.

How to Read It

During the period, price was pushed substantially higher from the lower area but did not keep all of that advance into the close.

After a decline, that attempt by buyers can be noteworthy, but the candle alone does not prove that the downtrend has ended. Support, prior structure, and subsequent closed candles should confirm whether the rejection matters.

Context and Confirmation

Read the candle only after its timeframe has closed. A single candlestick records what buyers and sellers did during one period, but it does not guarantee what the next period will do. Its meaning becomes stronger when it appears after a relevant prior move, near a meaningful support or resistance area, and alongside clear market structure. A wick through a level is not automatically the same as a confirmed body-close break.

Key Takeaway

The shape becomes an inverted hammer because of its position after a decline, not simply because it has a long upper wick.