Posted by : Neha Gupta
The hanging man is a bearish market indicator, which expresses a trend reversal of an uptrend move. Hanging man candlestick formation has a short body at the top of the candlestick with a long lower shadow and little or no upper shadow. The smaller the body and the longer the tail, the more significant the hanging man is as a bearish indicator.
The hanging man candle can be recognized by these criteria.
1) The real body is at the top of the trading range.
2) It should have a long lower shadow at least twice the height of the real body.
3) It should have a very short or no upper shadow.
1) The real body is at the top of the trading range.
2) It should have a long lower shadow at least twice the height of the real body.
3) It should have a very short or no upper shadow.
When the market is an uptrend & a hanging man appears it expresses a trend reversal. Hanging man formation occurs at the top of the trend & is a bearish trend reversal candlestick pattern.
The color of the candle can be green or red but according to experts’ trend reversal is more promising if the candle is Red in color. While trading in the markets I have often observed, that even when a green hanging man appears at the top of the trend, considering other factors for example volume and the following candles, it does promise a reversal.
Given that it is reversal pattern but when you see a hanging man, doesn’t mean that that you should exit your positions. One will need more bearish confirmation to do so. The appearing of a single hanging man candle does not promise a fall in the market, that is why we must look for further candlestick patterns which confirm the reversal.
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