Criteria 1. The upper shadow should be at least two times the length of the body. 2. The real body is at the lower end of the trading range. The color of the body is not important, although a white body should have slightly more bullish implications. 3. There should be no lower shadow, or a very small lower shadow. Signal Enhancements - The longer the upper shadow, the higher the potential of a reversal occurring. - A gap down from the previous day's close sets up for a stronger reversal move. - The day after the inverted hammer signal opens higher. - Large volume on the day of the inverted hammer signal increases the chances that a blowoff day has occurred.
*DISCLAIMER*: I am not a financial advisor nor am I giving financial advice. I am sharing my biased opinion based on speculation. You should not take my opinion as financial advice. You should always do your research before making any investment. You should also understand the risks of investing. This is all speculative based investing.