Inverted Hammer

The inverted hammer candlestick pattern is usually found at the bottom of downtrends and is a signal of a trend change. The open, close, and low are in close proximity to each other (in other words a small real body) and are all near the lower end of the pattern.

However, there is a long upper wick, indicating that the price rose during the session and then bears pushed it back down. This reversal pattern is formed when buying interest pushes the price higher against sellers but selling pressure forces the price down to where it opened.

Inverted hammers can be both green and red. They are green when the price manages to close a little above the open and red when the price closes a little below the open.

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