The Hanging man Candlestick is a bearish pattern that typically occurs at the top of an uptrend and can signal a potential reversal. It’s characterized by a small body, a long lower shadow (wick), and a short or non-existent upper shadow.
What does the Hanging man candle look like?
Here’s what it looks like: The body of the candle, which can be either red or green, represents the opening and closing prices for the trading period. The long lower wick signifies that prices fell during the period but then rose again to close near or at the open.
What does this chart pattern suggest?
The Hanging man pattern suggests that there was a significant sell-off during the period, but buyers were able to push the price back up. However, the pressure from sellers could indicate that a downward trend (bearish reversal) is on the horizon.
Remember, although a Hanging man Candlestick can be a helpful tool in predicting a potential market reversal, it should always be used in conjunction with the longer-term market structure before making trading decisions. It’s also important to wait for further price action or another bearish signal to confirm this pattern’s completion and validate its bearish bias.