Hammer and inverted hammer are key candlestick patterns in trading. Both indicate potential reversals and appear after a price decline, signalling bullish momentum.

Hammer:
The hammer has a small body and a long lower wick, often twice the size of the body, with little or no upper wick. It forms when sellers drive prices lower but buyers regain control, pushing the price near or above the opening. This suggests the potential for a bullish reversal.

How to Trade:
1. Confirm the pattern at support zones.
2. Wait for confirmation with the next candlestick closing above the hammer's high.
3. Place a stop-loss below the hammer's low.
4. Target key resistance levels or use a risk-reward ratio.

Inverted Hammer:
The inverted hammer has a small body with a long upper wick and little or no lower wick. It shows buying pressure but indicates caution, as sellers initially pushed prices lower before buyers stepped in.

How to Trade:
1. Confirm the pattern at the bottom of a downtrend.
2. Wait for a follow-up bullish candlestick.
3. Use the same stop-loss and target rules as with the hammer.

These patterns are most reliable when combined with volume analysis and other technical indicators for confirmation.