HANGING MAN CANDLESTICK

During an uptrend, a hanging man candlestick appears, signaling that prices may begin to decline. A little real body, a lengthy lower shadow, and little or no higher shadow make up the candle. The hanging man indicates that interest in selling is beginning to rise. The price of the asset must fall in the candle succeeding the hanging man for the pattern to be genuine.

• Following a price gain, a hanging man is a bearish reversal candlestick pattern. The advance might be little or significant, but it must include at least a few price bars going higher in overall.
• The candle must have a small real body and a lengthy bottom shadow at least twice the size of the actual body. Upper shadow is little or absent.
• The hanging man's close might be above or below open; all that matters is that it's close enough to keep the real body tiny.
• The pattern of a hanging guy is only a warning. For the hanging man to be a genuine reversal pattern, the price must move lower on the next candle. This is referred to as confirmation.

Look for a tiny body with a lengthy lower shadow at or around the high point. The candle can be any color, and the top shadow should be modest in comparison to the height of the candle line if it has one.

Consider the following factors to determine whether the candlestick pattern is "hanging man."

• The market is on the rise.
• Green or red candle with a tiny body.
• Lower shadow should be at least twice as long as the body.
• No upper shadow or the shadow cannot be longer than the body.

A hanging man depicts a significant sell-off after the open, sending the price down, only to be pushed back up by purchasers to around the opening price. A hanging man is seen by traders as a sign that the bulls are losing control of the asset and that it is about to undergo a decline.

After the price has been rising higher for at least a few candlesticks, the hanging man pattern appears. This does not have to be a significant advancement. It might be, however the pattern can also appear in the context of a short-term uptrend within a wider downturn. Although the sight of the flame is merely a warning and not always a reason to act.

Waiting for confirmation might result in a bad entry point, which is one of the weaknesses of the hanging man and many candlestick patterns. Within the two periods, the price might fluctuate so fast that the possible profit from the transaction may no longer justify the risk. Even if there is a confirmation candle, there is no guarantee that the price will fall once a hanging man develops. When starting a short trade, it is recommended to place a stop loss above the high of the hanging man to control risk.

When the major trend is up, avoid the hanging man as a bearish reversal. Any downward breakthrough is likely to be fleeting. However, continuations of the upswing perform nicely. Price breaks out higher and continues to rise.

• Wait for the price to close lower the day after the hanging man to assist you spot a reversal. 70 percent of the time, this strategy succeeds.
• A hanging man with a red body has a higher chance of reversing than one with a green body.