What is different between hammer and inverted Hammer in Forex trading?

Both Hammer and Inverted Hammer are candlestick patterns used in Forex trading. Although they look similar, they have different characteristics that can help traders make informed trading decisions.

Hammer:

The Hammer candlestick pattern is a bullish reversal pattern that forms after a downtrend.

The pattern consists of a small real body at the upper end of the trading range, with a long lower shadow that is at least twice the size of the real body.

The Hammer pattern suggests that selling pressure has exhausted, and buyers are starting to take control of the market. Traders may interpret the pattern as a signal to buy, with stop loss orders placed below the low of the Hammer.

Inverted Hammer:

The Inverted Hammer candlestick pattern is also a bullish reversal pattern that forms after a downtrend.

The pattern consists of a small real body at the lower end of the trading range, with a long upper shadow that is at least twice the size of the real body.

The Inverted Hammer pattern suggests that selling pressure has exhausted, and buyers are starting to take control of the market. However, traders should be cautious as the long upper shadow indicates that sellers are still present. Traders may interpret the pattern as a signal to buy, with stop loss orders placed below the low of the Inverted Hammer.

In summary, the main difference between Hammer and Inverted Hammer is their appearance. Hammer has a long lower shadow and a small real body at the upper end of the trading range, while Inverted Hammer has a long upper shadow and a small real body at the lower end of the trading range. Traders should be aware of the differences between the two patterns to make informed trading decisions.