What is the Hanging Man
The Hanging Man candlestick pattern is formed after an uptrend and indicates that a bearish reversal is taking place. This pattern consists of a single candlestick that is mainly a shadow.
- Hanging Man is single candlestick
- It is bearish reversal pattern
- Hanging Man appear at the end of bullish trend and indicate bearish reversal
Understanding the Hanging Man
The Hanging Man consists of a single candlestick. The real body of this candlestick is short and is found at the top of the candle. The lower half of the candle is a shadow that is twice the length of the real body. The top half of the candle has little to no shadow. The formation of this candlestick pattern indicates that a bearish reversal is taking place.
After up trend if Hanging Man will appear it will indicate trend reversal, from bullish to bearish.
How to Trade Hanging Man
Trading Hanging Man is not different that trading any other pattern. Placing stop loss will be always above the pattern. It should be define by your trading strategy, and should be always on safe place, never to close to pattern.
Taking profit also depends on your strategy. Some traders have fixed taking profit levels (for example 20 pips), some of them use technical analysis to define the best level for take profit others will follow other tools to exit trade (take profit).
The Differences Between Hanging Man and The Hammer
The hummer is the most similar pattern to Hanging Man. They look the same with two main differences First difference is body, the Hammer is bullish candlestick while Hanging Man is bearish candlestick. Second difference, Hammer is bullish reversal pattern and it will appear at the end of the downtrend. Hanging Man should appear at the end of the uptrend and it will indicate bearish reversal trend.
The Hammer is the most similar pattern. While Hanging Man suggest bearish reversal trend, the Hammer is indicating bullish reversal trend.
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