The inverse hammer, also known as the inverted hammer candlestick pattern, can appear on a chart at the bottom of a downtrend, signaling a bullish reversal. It has an upside-down shape, similar to the hammer pattern, and is distinguished by a long upper shadow, a short lower shadow, and a tiny candle body.

The inverse hammer is a bullish candlestick pattern that occurs during a downtrend, signaling a potential reversal. It has a small real body, usually located at the lower end of the trading range, and a long upper shadow, which is at least twice the length of the body. The long upper wick shows that buyers attempted to push the price higher, but sellers briefly gained control, pushing the price back down. However, the inability to maintain those lower levels suggests that buyers are stepping in, creating the potential for a trend reversal. For confirmation, traders often look for the next candle to close higher, indicating further buying pressure. This pattern is typically used in technical analysis to identify buying opportunities.