Hanging Man
The hanging man is a bearish reversal pattern appearing at the top of uptrends. It looks identical to a hammer but forms in a different context, signaling that selling pressure is emerging despite the uptrend.
Formation
- 1.Small real body at the upper end of the trading range
- 2.Long lower shadow (at least 2x the body length)
- 3.Little or no upper shadow
- 4.Forms after an uptrend
Psychology
During the session, sellers drove prices significantly lower before buyers pushed back. This selling pressure at the top of an uptrend warns that the buying momentum may be fading.
Trading Tips
- ✓Requires confirmation more than shooting star
- ✓Red/bearish body is more significant
- ✓Watch for next candle to close below the body
- ✓More reliable at resistance levels
Confirmation Signals
- →Bearish candle following the pattern
- →Gap down on next open
- →Increased volume on confirmation
- →Break below the hanging man's low
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Common questions about this pattern
A hanging man is a bearish reversal pattern at the top of uptrends. Despite its long lower wick showing buying interest, the fact that sellers could push prices down significantly warns of potential trend reversal.
It's moderately reliable but needs confirmation. The long lower wick actually shows buyers stepped in, so without a confirming bearish candle, the uptrend might continue.
Because the pattern shows buyers defended lower prices during the session. The reversal isn't complete until the next candle confirms that selling pressure is continuing.