1 Reliable Pattern - Hammer which will Make Money for You

An inverted Hammer can be either a bullish hammer formation or a bearish hammer formation and we will discuss these in subsequent paras.

Please see these images in serial as listed to understand first of all what a hammer formation looks like and remember that it is a reversal pattern and an eye in spotting this pattern can help you make a lot of money in the stock market. See all images as listed below and pictorially you will get an idea that it is a powerful indicator to make money in the stock market. 

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The Inverted Hammer is a signal of bullish reversal after a downtrend. It tells the traders that the bulls are now willing to buy the stock at the fallen prices. After the downtrend, there is pressure from the buyers in the market to raise the stock prices.

 

In a bullish inverted hammer that is formed at the bottom of the cycle, correct identification coupled with volume analysis can help you make a good profit in the market. If it is formed at a bottom means that now uptrend commencement is near. The point to note is that the upper or lower shadow or wick of the hammer is at least twice the size of the body.

The inverted hammer candlestick pattern occurs when a large bearish candle has a smaller, indecisive follow-through candle above it. It's a sign that selling pressure has started to fade and buying pressure is picking up. When analyzing an inverted hammer candlestick pattern, it is important to also consider other related market indicators, such as price movement over time, overall market volatility, volume activity, etc., which can offer additional information regarding whether or not you should take action based on your inverted hammer signal.

The above image shows you when buy is to be initiated once you have identified the bullish inverted hammer.

In a bearish inverted hammer that is formed at the top of the cycle, correct identification coupled with volume analysis can help you make a good profit in the market. If it is formed at a top means that now downtrend commencement is near. 

Please note that in the inverted hammer candlestick the colour of the candle does not hold much significance.