In technical analysis, the Inverted Hammer candlestick pattern is the reverse of the Hammer pattern. The pattern has one candle. The open, close, and low are near the low of the pattern.
The above chart shows the Inverted Hammer and Shooting Star Candlestick pattern.
An Inverted Hammer pattern forms when the buyers push the stock price higher against the sellers. However, the stock retraces and closes near the open. The pattern reflects buying interest for technical, psychological, or fundamental reasons. When the pattern forms in a downtrend, it suggests a possible market bottom or change in trend. So, it’s one of the reversal patterns.