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Hanging Man

Discussion in 'Traders Glossary' started by GlossaryEditor, Aug 15, 2015.

  1. GlossaryEditor

    GlossaryEditor Glossary Editor

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    Hanging Man is the poetic name of a candlestick pattern indicating a bearish reversal. This pattern consists of just a single candle, a small, square body with a long lower shadow (preferably no less than 3 times the body size) and without an upper body or with a very small one.

    Rules for recognizing a Hanging Man pattern:

    -The long lower shadow should be at least 2 times longer (preferably 3 times) than the body
    - Little or no upper shadow
    - The body is at the upper end of the candle (in fact it couldn’t be otherwise,due to previous conditions)
    - The color of the body is not important, but a black Hanging Man is more convincing
    - Hanging Man also could be a Doji with the same properties.


    This is a bearish reversal pattern and usually it appears after an upside move, at tops or under resistance levels. It gives us early notification that the market has reached some resistance and could bounce to the downside or even reverse for the long-term.
    The Hanging Man is treated as a bearish pattern, since it indicates that buying has become weaker. If we take a look at its shape, then we will see that the market opened in a continuation of the previous move up, but then shows a deep move down. By the end of the trading period buyers have mostly returned their positions back, but not absolutely – the market was not able to form another upward candle. So, the Hanging Man is an early sign of buyers’ exhaustion

    Warning: Conditions Not Met

    If the price closes above the Hanging Man’s high by the end of the next trading session, this pattern is treated as not met.

    [​IMG]

    Two Hanging Men (black body and white body) side by side on Weekly USD/CHF

    [​IMG]
     

Y

y/y

Z

ZEW

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