The Inverted Hammer formation is a technical analysis chart pattern. The Inverted Hammer is a bullish formation. It represents the opposite of the Shooting Star formation. Three criteria establish an Inverted Hammer formation:
- A real body that is at the lower end of the trading range (body color is not important).
- A long upper shadow, which should be twice the height of the height of the real body.
- A very short, if any, lower shadow.
An ideal Inverted Hammer formation is one that occurs after a downtrend or at the bottom of a congestion zone. Also, the larger the gap between the real body of the formation and the real body of the preceding bar, the stronger the confirmation.