Inverted Hammer
An Inverted Hammer is a single-candle bullish reversal at the bottom of a downtrend: small body at the low of the range with a long upper wick at least twice the body height, showing buyers pushed price hard before sellers pulled it back.
What it measures
Small real body in the lower third of the range, upper wick at least 2× the body height, minimal lower wick. Context matters — the same shape at the top of an uptrend is a Shooting Star (bearish).
Parameters
| Name | Default | Range | Note |
|---|---|---|---|
| wick_to_body | 2.0 | 1.5–4.0 | Minimum upper-wick-to-body ratio. Higher values require a more dramatic buying attempt. |
| lower_wick_max | 15 | 5–30 | Maximum lower wick as percentage of range. A clean inverted hammer has almost no lower wick. |
| require_downtrend | true | true, false | Must print after a downtrend, otherwise the shape is a Shooting Star. |
How it behaves
Confirmation is essential: an inverted hammer only becomes a reversal if the next candle closes above its high. Buyers attempted a rally intraday and lost it — the follow-through is what turns that attempt into a trend change.
When it misleads
Without confirmation, most inverted hammers resolve as continuation candles — the long upper wick becomes overhead supply that the market rejects again. Also common: prints on low volume, where the "rejection" was a handful of participants and carries no order-flow signal.
Backtest result
Sourced backtest in preparation — we're running the rule on our own historical candles before publishing numbers we can stand behind.
FAQ
- Inverted Hammer vs Shooting Star?
- Identical geometry. The Inverted Hammer appears after a downtrend and is bullish (with confirmation); the Shooting Star appears after an uptrend and is bearish.
- Why is confirmation more important than for a standard Hammer?
- The Inverted Hammer closes near the low, so the candle itself is not bullish — the long upper wick is a failed rally. Only the next candle closing above the high proves the buyers came back.
- Does body colour matter?
- Green is stronger (buyers held some of the intraday gain), but red inverted hammers are still valid with confirmation.
Build a strategy with Inverted Hammer
Drop the block into the Nodlow builder and backtest on real historical data.
Try it in the builder