Bearish Inverted Hammer Pattern
The Bearish Inverted Hammer is a candlestick pattern that signals a potential reversal from an uptrend to a downtrend. It appears after a price rally or during an uptrend and indicates that selling pressure may soon take over. Although the Inverted Hammer itself is generally considered a bullish pattern when it appears in a downtrend, when it forms at the top of an uptrend, it can signal a potential bearish reversal.
Characteristics of the Bearish Inverted Hammer Pattern:
- Shape: The Bearish Inverted Hammer has a small real body located near the lower end of the trading range, with a long upper shadow that is at least twice the length of the body. The lower shadow is either very small or absent.
- Location: It appears at the top of an uptrend, indicating that the bulls attempted to push the price higher but were unable to sustain the momentum, allowing the bears to regain control.
- Signal: It suggests that although the buyers tried to drive the price up, the selling pressure might soon dominate, leading to a potential bearish reversal.
Identifying the Bearish Inverted Hammer Pattern
To identify and analyze the Bearish Inverted Hammer pattern, follow these steps:
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Load the Chart for the Asset:
- Open the platform.
- Load the chart for the asset or instrument you want to analyze.
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Set the Timeframe:
- Choose a suitable timeframe that matches your analysis (daily, weekly, or other longer intervals). The Bearish Inverted Hammer pattern is more reliable on higher timeframes.
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Select Candlestick Chart:
- Ensure that the chart type is set to “Candlestick” to properly visualize the patterns.
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Use the Pattern Recognition Tool:
- Click on the FX Study section within the platform.
- Navigate to the Candlestick Pattern menu.
- Select the Bearish Inverted Hammer Pattern from the list of available patterns.
- The platform tool will automatically highlight occurrences of the Bearish Inverted Hammer on your chart, making it easier to spot potential trend reversals.
