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Candlestick Patterns
Resources for Advanced Trading


Candlestick Inverted Hammer Pattern
Bullish Reversal - Potential Buy Signal

Candlestick
Patterns

Three River Evening Three River Morning
Bearish Three Gaps Bullish Three Gaps
Dark Cloud Cover Incomplete Dark Cloud Cover
Doji Star - Evening Position Doji Star - Morning Position
Engulfing Bullish Engulfing Bearish
Hammer/Hangman Inverted Hammer/Shooring Star
Bearish Harami Line Bullish Harami Line
Piercing Line Thrusting Line
Side-by-side Bearish Lines Side-by-Side Bullish Lines
Tweezers Bottoms Tweezers Tops
True Doji Lines Doji Lines
F.Tam Inside Out Up F.Tam Inside Out Down

The Inverted Hammer and Shooting Star patterns are part of a larger group of candlestick patterns called the Umbrella Lines. The Umbrella line candles include the Inverted Hammer, the Hammer, the Shooting Star and the Hangman. This pattern group can form in either color (black or white). This pattern group is one of the only pattern types that is irrelevant of candle color. The other pattern types that shares these conditions are the Doji pattern group and the Doji Star pattern group.

The Inverted Hammer and Shooting Star patterns are the exact same candle formation. What makes this type of candle an Inverted Hammer is when this candle forms after a market down trend. Then it is said that the market is attempting to hammer out a bottom (like the Japanese did to create their copper woks). Confirmation of the Inverted Hammer pattern will generate a buy signal.

When this type of candle is found after an up trend, it is considered a Shooting Star because of it resemblance of a shooting star in the night sky. Confirmation of the Shooting Star pattern will generate a sell signal.

Notice: Investors should continually watch for Dojis and the Umbrella group of candles. These candle types will typically precede a major market reversal. In fact, many investors have told me these types of candles are some of the most important candle types for investors to use.

 


 


 



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