Inverted Hammer is a bullish reversal pattern. This pattern is characterized by a long upper shadow and a small real body, appearing after a long black real body. It resembles with Bearish Shooting Star.
This pattern appears in a downtrend. In this pattern, a long black candle appears on first day. On second day, a small real body appears, which forms at the lower end of range. Second day's candle has upper shadow, which is at least twice as long as the real body and does not have lower shadow. Colour of the real body is not of much importance.
Strategy: A confirmation can be seen in the form of next day opening above hammer's body of a white candle with higher prices. Long positions can be initiated post confirmation.
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