Inverted hammer

An inverted hammer is another type of candlestick pattern commonly used in technical analysis, especially in the context of cryptocurrency trading. It has a small body near the bottom of the trading range and a long upper wick, resembling an upside-down hammer.

Inverted hammer candlesticks often occur at the end of a downtrend and can signal a potential reversal to the upside. Similar to regular hammers, they suggest that selling pressure has weakened, and buyers may be stepping in to push the price higher. However, as with any technical analysis tool, it's essential to consider other factors and indicators before making trading decisions solely based on the inverted hammer pattern. This includes factors such as volume, market sentiment, and the overall trend. Traders typically use the inverted hammer as a signal to consider entering long positions or closing out short positions, but confirmation from other technical indicators is usually sought for more reliable trading decisions.