Bullish Inverted Hammer has the following characteristics:
- The upper shadow, which is two or more times longer than the real body of the candle.
- Absence or very short lower shadow.
- The real body is located at the top of the candle and usually has a small length.
This pattern is considered bullish, as it suggests that prices may start to rise after it appears. However, to confirm the signal, you should pay attention to the subsequent candles and trading volumes.
In trading, Bullish Inverted Hammer can be used as follows:
- Entering a position: Traders may consider opening a long position after closing a candle with a Bullish Inverted Hammer, expecting prices to start rising.
- Setting a stop loss: To manage risks, traders can set a stop loss below the minimum of a Bullish Inverted Hammer candle.
- Signal Confirmation: For additional signal confirmation, traders can pay attention to the following candlesticks and trading volumes.
It is important to remember that no pattern is a guarantee of success, so other analysis tools should be used to make trading decisions and take into account the market context.