Technical Analysis Hanging Man Pattern

Stock Market Investing - Technical Analysis - Hanging Man Candlestick Bearish Reversal Pattern

Technical Analysis - What is the Hanging Man in Candlestick Charts?

In technical analysis the Hanging Man is a bearish candelstick chart reversal pattern. It consists of one candlestick with a head at the top and a body or shadow hanging down below it (the Hanging Man actually looks exactly the same as the Hammer - the difference is the trend that precedes them - the Hanging Man comes at the end of an upward trend, the Hammer comes at the end of a downtrend). There is a high probability that the upward trend will change and reverse to a downward trend or to a sideways patern

In candlestick charts a red body is more bearish than a green body. The lower shadow in the hanging man candlestick needs to be at least two times the size of the body. The trend must be an upward trend for the pattern to be valid and there must be a gap up from the previous close. Confirmation of the reversal comes if the price trades below the candlestick pattern. The level of confirmation required varies depending on your risk appetite - aggressive traders will enter the trade as soon as the price trades below the hanging man low, more conservative traders will wait for the price to close below the low of the shadow. The hanging man is a less bearish candlestick pattern but it is less bearish than a shooting star.

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