How to Read the Inverted Hammer Candlestick Pattern?

Candlestick charts are an invaluable source of information for any trader. Despite the overwhelming candlestick pattern variants, it is still crucial to understand its functions. Supposed you’re analyzing the momentum or the market trend with an inverted hammer candlestick, here’s how you properly read and to apply it strategically. 

Generally, an inverted hammer is a type of candlestick pattern treated as a possible trend-reversal signal. As it is a well-known bullish reversal pattern, it mainly occurs at the end of a downtrend. The inverted hammer has a remarkable shape and clear-cut chart position make it recognizable among the others. 

The inverted hammer is a variation of the regular hammer pattern. Typically, it’s easy to identify a hammer pattern though there are exceptions. Of course, there are instances where the inverted hammer is mistaken as a shooting star pattern. They look almost identical with a small real body and a long upper shadow, but it marks the possible lowering turning point. That is why traders must be aware of everything about the peculiarities of patterns.