Hanging Man candlestick, bearish reversal pattern, technical analysis, candlestick charting, trading strategy, price action
The hanging man candlestick pattern is one of the most popular candlestick patterns used in technical analysis to predict the reversal of the bullish trend in the market. The pattern is a bearish reversal pattern that usually appears at the end of an uptrend. In this article, we will provide a comprehensive guide to understanding the hanging man candlestick pattern and how to trade it effectively.
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| Hanging Man Candlestick |
The pattern is called the hanging man because the long lower shadow looks like a hanging man. The hanging man candlestick pattern is considered a reliable signal for a bearish reversal when it appears at the end of an uptrend.
How to Identify the Hanging Man Candlestick Pattern?
The hanging man candlestick pattern can be identified by the following characteristics:
A small real body: The hanging man candlestick pattern has a small real body, which is usually colored white or green.
A long lower shadow: The hanging man candlestick pattern has a long lower shadow, which is at least twice the length of the real body.
Little or no upper shadow: The hanging man candlestick pattern has little or no upper shadow, which indicates that the buyers were unable to push the price up significantly.
The pattern appears at the end of an uptrend: The hanging man candlestick pattern appears at the end of an uptrend and signals the beginning of a bearish reversal.
What is the Hanging Man Candlestick Pattern?
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| Hanging Man Candlestick |
The hanging man candlestick pattern indicates that the buyers are losing momentum, and the sellers are taking control of the market. The pattern suggests that the buyers attempted to push the price up, but the sellers were able to push the price down, resulting in a long lower shadow.
The long lower shadow of the hanging man candlestick pattern indicates that the bears were able to take control of the market and push the price down significantly. The small real body of the pattern suggests that the buyers were unable to push the price up significantly.
When the hanging man candlestick pattern appears at the end of an uptrend, it suggests that the bullish trend is about to reverse. The pattern indicates that the buyers are losing momentum, and the sellers are taking control of the market.
How to Trade the Hanging Man Candlestick Pattern?
Trading the hanging man candlestick pattern requires traders to wait for confirmation before entering a trade. Traders can use the following steps to trade the hanging man candlestick pattern:
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| Hanging Man Candlestick |
The first step in trading the hanging man candlestick pattern is to identify the pattern. Traders should look for a small real body, a long lower shadow, and little or no upper shadow.
Step 2: Wait for confirmation
Traders should wait for confirmation before entering a trade. Confirmation can be in the form of a bearish candlestick pattern, a break below the low of the hanging man candlestick pattern, or a break below a key support level.
Step 3: Place a stop loss
Traders should always place a stop loss to limit their losses in case the trade goes against them. The stop loss should be placed above the high of the hanging man candlestick pattern.
Step 4: Set a profit target
Traders should set a profit target based on their trading strategy. The profit target should be at least twice the size of the stop loss.
The hanging man candlestick pattern is a popular bearish reversal pattern used in technical analysis to predict the reversal
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