Independent Forex Trading

Inverted Hammer Candlestick

The inverted hammer candlestick represents a possible reversal to the upside, signifying a bullish reversal. The inverted hammer candlestick is composed of a relatively small bullish body, either no, or, a small lower shadow and a significantly longer upper shadow.

inverted-hammer-candlestick.jpg

Inverted Hammer Candlestick Analysis

The inverted hammer candlestick is significant when it occurs in an established down trend. It signifies a failed attempt for the rate to move lower, while also closing above the open value for that time period.

Confirmation

The inverted hammer candlestick becomes increasingly relevant when the following occur:

  • It is composed of a small bullish body with no, or a very small lower shadow and a upper shadow of significant length.
  • It is preceded by a strong down trend.
  • Confirmation candles are used to confirm the reversal.
  • Oversold indicators confirm a change in market direction.

Forex Trading Ideas

The inverted hammer candlestick pattern may be traded alone, or with a combination of signals and/or indicators. For example:

  • Step 1 – Wait for a inverted hammer candlestick pattern to appear during an established down trend.
  • Step 2 - Confirm the trend reversal with at least one confirmation candle.
  • Step 3 – Further confirm oversold conditions using the RSI – Relative Strength Index*
  • Once conditions 1 – 3 are met place an entry order.

*Additional confirmation ideas – confirm the inverted hammer candlestick pattern formation when it appears outside of the lower Bollinger Band or when the Stochastic Oscillator signals oversold conditions.

Never Miss a Trade Opportunity Again

Candlestick Pattern Recognition Robot

Continuously monitor all currency pairs and time compressions around the clock for important candlestick patterns using the Candlestick Pattern Recognition Robot. Get Your Copy Today.

Customization

By adding additional confirmation signals and indicators the evening star candlestick pattern has the potential to become increasingly accurate in predicting a trend reversal. FxSpyder provides integrated customization tools for hands free trade automation using the JavaScript Object Model. Full details are included in the Help Section of the FxSpyder trading application.

Want Fast Robot Customizations?

FxSpyder provides complete script customization services with a short turn-around time and for a reasonable price. Plus, who better to create your FxSpyder autotrading scripts than the FxSpyder Programming Team. Contact Us Today.

Download Free Candlestick Pattern Recognition Robot
Live Chat