The inverted hammer candlestick pattern indicates a bullish reversal or reversal of a short-term downtrend. After a prolonged sell-off, when prices are near their lows for the period, an inverted hammer occurs. It is easy to identify on a chart because it looks like an upside-down, hanging shooting star candlestick formation.

Yes, an inverted hammer is considered a bullish candlestick pattern. It typically appears at the bottom of a downtrend and signals a potential reversal to the upside. The candle has a small body, a long upper shadow, and little to no lower shadow. This formation suggests that while sellers drove prices lower initially, buyers stepped in to push prices back up, reflecting a shift in market sentiment. However, for the inverted hammer to be a reliable bullish signal, it should be confirmed by the following day's price action, ideally with a strong bullish candle that closes above the inverted hammer's close. This confirmation indicates that buying pressure is continuing and increases the likelihood of a trend reversal.