A comparative look at hanging man, hammer & inverted hammer candlestick patterns

Posted by: Neha Gupta

So far in candlesticks we have discussed the hanging man, hammer and in my recent post the inverted hammer. It is always good to compare multiple patterns and understand their uniqueness as well as their similarities. If we do so it helps us in developing an understanding of the subject as a whole & also the entire learning becomes application friendly.

The hanging man is a bearish trend reversal pattern, whereas the hammer and inverted hammer are both bullish trend reversal patterns. All of these patterns have smaller bodies & they have larger tails in comparison. These kind of candles basically mean that despite having a long range of price movement, the market is unable to close far from its opening price and this gives us the signal of a trend reversal if the market has been trending in a single direction for long enough.

I would suggest that a trader/investor compare many such similar looking candles on multiple charts to advance your learning of these patterns. If you want to deepen your understanding on some of the practical aspects of implementing these patterns, you must refer to my recent post on time-frames.

Similar to the inverted hammer another bearish trend reversal pattern appears at the top of market and can be very powerful, which is called a shooting star. I will be discussing this important pattern in my following posts along with the other star patterns.