Are you searching for Hanging Man Candlestick Chart Pattern, How Hanging Man Candlestick Pattern works, How Hanging Man Candlestick Pattern formed, and Hanging Man Candlestick Pattern examples then you came to the right place. Here you will find everything about Hanging Man Candlestick Pattern.
What is a Hanging Man Candlestick?
The hanging man candlestick pattern appears during an uptrend, and its real body can be either Red or Green. While it signifies a potential top reversal, it requires confirmation during the next trading session. The hanging man usually has little or no upper shadow.
The term “Hanging man” refers back to the candle’s shape, in addition to what the looks of this pattern infer. The hanging man represents a possible reversal in an uptrend.
Whereas selling an asset solely primarily based on a hanging man pattern is a risky proposition, many consider it is a key piece of evidence that market sentiment is beginning to turn. The strength within the uptrend is no longer there.
Hanging Man Candlestick Example
The hanging man candlestick will get its identity from its look as a small body positioned above a long tail.
The tail happens because of sellers pushing the price far below the open, whereas the small body is the result of the bulls managing to bring the closing price again near to the open.
Clearly, the high price for the day doesn’t exceed its open.
Security that opens at $100 per share, trades down to $80 per share as the daily low, and then closes at $95 per share would produce a hanging man candlestick.
Day traders who’re comfortable with figuring out the hanging man candlestick will find numerous complimentary chart patterns that can assist them to confirm and time an upcoming reversal in an existing uptrend.
How to Find a Hanging Man
When the following conditions are met, the hanging man is formed:
1) Before the hanging man appears, the price must be in an upward trend.
2) The body of the hanging man candle is very small. It doesn’t matter what colour it is or how close it is, but the body should be small.
3) There should be little or no wick on the candlestick.
4) There should be a large lower candlestick wick.