Inverted Hammer Candlestick Pattern: What It Looks Like and What It Means
An inverted hammer is a one-candle pattern: a small body with a long upper wick, appearing after a decline. The tall wick shows buyers pushed the price up during the period before it faded, so the pattern is read as a possible bullish reversal: a hint that a falling price may be turning into a rising one. Treat it as a prompt to look further, not a prediction.
How It Forms
An inverted hammer appears at the bottom of a move down. Within a single period, the price opens, climbs to a high, then fades back to close near where it opened.
A candle covers one period of trading. Its body is the box that spans the open and the close, and its wicks are the thin lines that reach the period's high and low. Bullish describes buyers gaining ground, and bearish describes sellers doing the same.
The five candles in the drawing use these made-up prices:
| Candle | Open | High | Low | Close |
|---|---|---|---|---|
| 1 | $36 | $39 | $29 | $31 |
| 2 | $30 | $32 | $22 | $24 |
| 3 (inverted hammer) | $15 | $33 | $14 | $17 |
| 4 | $17 | $28 | $15 | $26 |
| 5 | $26 | $36 | $24 | $34 |
Candles 1 and 2 each close below their open, which means the price is falling. Candle 3's body is just $2 wide, yet its upper wick runs $16, from $17 up to $33: buyers drove the price up, then handed most of it back. Candle 4 closes at $26, well above candle 3's $17 close. That is the kind of follow-up this pattern is said to need.
How to Read It
- The attempt. The tall upper wick shows buyers tried to take control during the period, even though they could not keep the high.
- The location. The shape is read at the bottom of a move, after a clear fall. After a rise, the same shape has a different name and reading.
- The next candle. Rapunzl's pattern library notes that a higher close on the next candle matters more here than it does for a plain hammer. In the drawing, candle 4 closes above the inverted hammer's close.
What to Watch For
A lone inverted hammer proves little. If the next candle closes lower, the buyers' attempt simply faded. Where it forms also matters: a reversal shape near support and resistance levels gets more attention than one in the middle of nowhere.
Three look-alikes are worth separating from it. The first differs by position alone; the other two differ in shape.
- A shooting star has the identical shape but appears after a rise, so it is read as bearish. The preceding trend is what separates them.
- A hammer also follows a decline, but its long wick points down instead of up.
- A gravestone doji has almost no body and no lower wick, and the app describes it as a possible bearish reversal at a high.
Free or Premium
Inverted Hammer is a core pattern, so there is nothing to unlock: it is free on charts and in Rapunzl's Stock Scanner. Rapunzl Premium matters only for the 10 extended patterns, and only on charts, since the Stock Scanner's filters include those too.
Try It in Rapunzl
Start with a stock on a Candlestick or OHLC chart. In Customize Chart → Chart Indicators → Levels, Patterns & AI Charts, the Pattern Markers toggle puts a ▲ on bullish patterns, a ▼ on bearish ones and a ◆ on indecision, with a list of everything detected below the chart.
In the Stock Scanner, the Bullish candlestick filter lets you pick Inverted Hammer among its patterns and lists stocks that completed a bullish pattern on the latest daily bar. The idea "Bullish candlestick today" does something similar, and its own warning applies: candlestick patterns are hints, not promises, and many do not lead to a rise.
A 15-Minute Class Activity
Four Cards, One Sort. Pairs need four index cards and a pencil, one made-up candle per card.
- 3 minutes. Pairs copy each candle onto its card, then write the body size and the longer wick in dollars. Card A: open $50, high $64, low $49, close $51, after a fall. Card B: the same prices, after a rise. Card C: open $72, high $73, low $60, close $71, after a fall. Card D: open $45, high $58, low $45, close $45, after a rise.
- 5 minutes. Sort the cards into inverted hammer, shooting star, hammer and gravestone doji, with a one-line reason each. The answers are A inverted hammer, B shooting star, C hammer, D gravestone doji.
- 4 minutes. Pairs write what card A's next candle would need to do to back up the bullish reading. (Close above $51.)
- 3 minutes. Exit ticket: each student writes one sentence on what separates card A from card B.
Related Patterns
- How to Read a Candlestick Chart: the starting point for reading any candle.
- Hammer: the wick points down.
- Shooting Star: the identical shape, after a rise.
- Gravestone Doji: a long upper wick, almost no body.
Frequently Asked
Questions
An inverted hammer is a candle with a small body and a long upper wick that appears after a decline. The wick shows buyers tried to take control.
They look the same, so only the location differs. An inverted hammer follows a fall and is read as a possible bullish reversal. A shooting star follows a rise and is read as a possible bearish one.
No. One inverted hammer promises nothing. What the next candle does matters, and a close below the hammer's close would suggest the buyers' attempt simply faded.
Give Students Practice Reading Charts
Curious how Rapunzl's charts and simulator would fit your own lessons? Request a demo to judge the fit yourself. Families can start at our parents page.
Indicators, patterns and examples in this article are for education and are not investment advice or a recommendation to buy or sell any security.
By Nate Thomas, School Partnerships Lead at Rapunzl.