Bullish Inverted Hammer Pattern

by · December 31, 2009

BULLISH INVERTED HAMMER PATTERN (BIHP)
an inverted hammer at the end of the downtrend

Characteristics:
1. Market is on a downtrend;
2. Day 1 is a black stick formed at the lower end of the trading range;
3. On Day 2, we have a small body formed at the lower end of the trading range;
4. No gap down is required, as long as the pattern is seen after a downtrend;
5. The upper shadow of Day 2’s body must be at least twice that of Day 1’s body; and
6. Day 2’s body does not have a lower shadow (or very little lower shadow).

Brief Explanation:
The BIHP is a stick distinguished by a long upper shadow and a small stick preceded by a long black body. Its shape is similar to the Bearish Shooting Star (BSS). The star appears in a downtrend and thus becomes a potentially bullish inverted hammer.

Notes:
1. The color of the body should be black on Day 1;
2. The color of Day 2’s body is not important;
3. On Day 3, a confirmation for the bullish verification is required. This may be through an opening that is above the hammer’s body or a white stick with higher prices.